Since its founding, MIGA has issued guarantees totaling $14.7 billion. Since 1988, MIGA insured up to 774 guarantees for projects from 91 developing countries. IDA eligible countries are top MIGA clients making up 43 percent of MIGA’s gross outstanding portfolio. In 2005, MIGA issued 62 guarantees to 33 projects totaling $1.2 billion with Gross Exposure at $5.1 billion.
MIGA encourages development by insuring new cross-border investments from any MIGA member countries. MIGA insured investment includes: expansion, modernization, or financial restructuring of existing projects, privatization of state-owned enterprises. MIGA also insures investments involving equity, shareholder loans, and shareholder loan guaranties with minimum maturity of three years; unrelated borrowers with shareholder investment already insured; technical assistance, management contracts, franchising.
Europe and Central Asia represents 45 percent of MIGA outstanding portfolio, followed by Latin American and the Caribbean at 25 percent, sub-Saharan Africa at 17 percent, Asia and the Pacific at 13 percent, and Middle East and North Africa at 3 percent. By sectors, MIGA’s coverage of the infrastructure and finance are both at 39 percent and the largest, followed by contracts for oil, gas, and mining at 9 percent, agribusiness and manufacturing at 8 percent, and tourism and services at 5 percent.
Lending products
Pricing for MIGA guarantee premiums is calculated based on both country and project risk with duration up to 15 years. MIGA can terminate the contract only when the guarantee holder default on its contractual obligation to MIGA, but after three years of coverage, the guarantee holder may cancel or reduce coverage on any contract anniversary. Four types of coverage are transfer restriction, expropriation, war and civil disturbance, breach of contract, and investors may select one or a combination for MIGA coverage. Equity investments can be insured limit is 90 percent and debt up to 95 percent. MIGA is allowed to insure up to $200 million, with further coverage arranged through syndication of insurance.
Requirements to receive lending
Eligibility for coverage is considered case-by-case. Nationals from MIGA member countries may be eligible for MIGA provided the nationality of the investor and the investment are not the same. MIGA makes for exception under certain conditions. Coverage for corporations requires the company to be incorporated with its principal place of business in a member country, or with majority-ownership by nationals of member countries. A state-owned corporation’s eligibility depends on its commercial basis.
To qualify for MIGA coverage, preliminary applications must be submitted before an investment commitment. MIGA only covers new investments. With the submission of the preliminary application, MIGA staff will decide within three business days on the project merit. Further process requires a confirmation letter and a definitive application with request for further details on the project. MIGA can usually process a guarantee within three to four months after receiving a definitive application. Application process fee of $5000 could be waived under special circumstance for Small and Medium Investors and Enterprises.
Technical assistance
Technical assistance from MIGA helps government and other intermediaries to respond to investor needs. Also, MIGA is active in resolving disputes in Argentina, China, the Dominican Republic, Egypt, Guatemala, the Kyrgyz Republic, Mauritania, Moldova, Nicaragua, and Nigeria.