Financing & Financial or Political Risk Mitigation

The World Bank Group, via its private sector arms--the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA)--is the largest multilateral source of financing for private enterprises in developing countries.  Both the IFC and MIGA act as long-term partners:  mechanisms for emerging market entry, catalysts to mobilize capital, and enablers of a transparent business environment. 

The International Finance Corporation (IFC)

As part of the World Bank Group, IFC shares the same President and Governing Board as IBRD and IDA, but it has a separate development mandate, staff, capital base and operating policies.  It is the single largest source of debt and equity financing for private enterprises in developing countries, and it has consistent AAA and Aaa credit ratings.  IFC's products and services include:

• Loans: long-term (up to 12 years), local currency, fixed or variable rates, market pricing;

• Equity & Quasi-Equity: common or preferred stock, sub-debt, asset- and mortgage-backed securities;

• Syndicated Loans (B Loans): mobilizes capital by offering commercial banks and other financial institutions the chance to lend to IFC-financed projects that may not otherwise be "bankable" without IFC's participation and preferred creditor status;

• Risk Mitigation Instruments: a variety of tools--including currency and interest rate swaps and partial credit guarantees--to guard against asset and liability mismatch; and

• Structured Finance: guarantees, partial credit guarantees, securitizations and risk-sharing facilities.

• Trade Finance:  The IFC's Global Trade Finance Program provides guarantees to expand and extend the capacity of private banks to finance trade in emerging market.  GTFP has a broad network of issuing banks that confirming U.S. banks can confidently utilize to extend credit to their client's buyers in developing countries.

The Multilateral Investment Guarantee Agency (MIGA)

MIGA provides Political Risk Insurance (PRI) and Guarantees to allow investors and lenders to manage project-related political and non-commercial risk associated with currency transfer restrictions, expropriation, war and civil disturbance, and breach of contract.  MIGA encourages FDI flows to less established markets, supports projects in "high risk" countries, and acts as a catalyst for the provision of long-term financing.