World Bank unit links up with Exim, ECGC

World Bank's Multilateral Investment Guarantee Agency (MIGA) today announced a partnership with Export-Import Bank of India and Export Credit Guarantee Agency of India (ECGC) to encourage Indian investments in other developing countries through provision of World Bank group umbrella of deterrence against non-commercial risks.

MIGA has made support to Indian investors a priority as it seeks to expand south-south investment flows. "We are here to provide risk cover in the weakest of countries. Our aim is development not profit," MIGA vice-president Luis Dodero said.

MIGA provides risk coverage of upto $200 mln per project and upto $620 mln per country. The ceilings will not act as a limiting factor as MIGA can always get reinsurance if it nears the country ceiling and be again prepared to provide guarantees for further projects.

ECGC chairman P K Dash said the partnership with MIGA will help the Indian guarantee agency to support big ticket investments by Indian investors abroad.

Exim Bank chairman T C Venkat Subramanian said the partnership will combine Exim Bank's competitively-priced financing with risk insurance. Indian outbound investments now total $ one billion a year, with 62 per cent of it going to the developing countries.

MIGA, apart from leveraging the World Bank group's influence in the developing countries, can also offer investment dispute mediation services to help sustain existing investments.

To drive home the power of MIGA, Dodero said when the Indonesian government had cancelled all the 27 power purchase agreements during the Asian crisis, MIGA settled all the claims of investors and later recovered the amount with interest from Indonesia.

To further stress his point, he said when Russia imposed moratorium on private foreign capital payments in 1998, MIGA had worked to get projects it had provided risk cover to be exepted from the suspension.