Investment
Guarantee
Guide
MIGA

Insuring Investments
Ensuring Opportunities

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Investment Guarantee Guide1MIGA2

Investment Guarantee Guide

MIGA insures foreign direct
investments against losses
related to

Breach of Contract

Currency Inconvertibility& Transfer Restriction

MIGA:
Bringing UniqueStrengths toInvestments
The Multilateral Investment Guarantee
Agency (MIGA) is a member of the WorldBank Group. Its mandate is to facilitate foreign direct investment (FDI) in developing
countries by providing guarantees (politicalrisk insurance and credit enhancement) tocross-border investors and lenders.
MIGA’s guarantees protect investments against noncommercial risks and can help investors obtain access to funding
sources with improved financial terms and conditions. The
agency derives its unique strength from being a member

Expropriationof the World Bank Group and a treaty-based internationalorganization whose shareholders include most countriesof the world. This enables MIGA to provide an umbrella ofdeterrence against government actions that could disrupt
projects and assist in resolving disputes between investors
and governments. MIGA also adds value through its ability
to offer clients extensive knowledge of emerging markets
and of international best practice in environmental and social

War & Civil Disturbancemanagement.
The agency works closely with public and private political risk
insurance providers to increase insurance capacity. MIGA canact as the arranger for a project’s total noncommercial risk
insurance requirements.

Non-Honoringof Financial Obligations

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Investment Guarantee Guide

Eligible Clients

Eligible Investments

MIGA insures investments made by investors from aMIGA insures cross-border investments. These include

MIGA member country into a developing member coun-

new investments as well as investments (a) associatedtry. Most nations are MIGA member countries (listed atwith the expansion, modernization, improvement, or

www.miga.org). Corporations or financial institutions

enhancement of existing projects, or (b) where the inves-are eligible for coverage if they are either (a) incorpo-

tor demonstrates a medium- or long-term commitment torated in and have their principal place of business inthe project, so long as in both (a) and (b) the project hasa member country other than the host country, or (b)a high developmental impact in the host country. Acqui-incorporated in the host country, with most of their capi-

sitions of existing projects by new investors, including

tal owned by nationals of member countries other thanthe privatization of state-owned enterprises, may also

the host country. In certain cases, the agency may also

be eligible. MIGA can cover equity investments, share-insure an investment made by a national or juridical

holder loans, and shareholder loan guarantees, provided

entity incorporated in the host country, provided thethe loans have a minimum maturity of more than one

assets and funds originate from outside that country.

year. Nonshareholder loans can also be covered if they

Investments by state-owned corporations are also eligi-

relate to a specific investment or project in which someble if they operate on a commercial basis. Investments

other form of direct investment is present. Other forms

by a nonprofit organization may be eligible if it is estab-of investment, such as profit and production sharing

lished that the specific investment will be carried out on

contracts; management contracts; engineering, procure-a commercial basis.

ment, and construction (EPC) contracts; asset securitizations; capital market bond issues; operating leases;
and franchising and licensing agreements may also be
eligible for coverage.
In keeping with MIGA’s objective of promoting economic
growth and development, projects supported must be
financially and economically viable, environmentallysound, and consistent with the country’s labor standards
and development objectives.

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Political Risk
Insurance

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Investment Guarantee Guide

Breach of Contract
Breach of Contract coverage protects against losses arising from a host government’s repudiation or breach of acontract entered with the guarantee holder or the project company, provided that a final and binding arbitration
award or judicial decision has been rendered in favor of theExpropriation

guarantee holder and cannot be enforced against the hostgovernment. Compensation is based on the amount thatthe guarantee holder is entitled to recover from the hostgovernment in accordance with the terms of the arbitration
award or judicial decision.

Expropriation coverage protects against losses attributable to measures taken or approved by the host government that deprive the guarantee holder of its ownershipor control over its investment, or in the case of debt,
results in the project enterprise being unable to meet its

Currency Inconvertibility
and Transfer Restriction
Currency Inconvertibility and Transfer Restriction coverage protects against (a) the inability to convert, fromobligations to the lender. Both direct and indirect (creeping) expropriation are covered. Compensation for equity
is based on the guaranteed percentage of the net bookvalue of the guaranteed investment in the project enterprise. For debt, compensation is based on the guaranteed
percentage of the principal and interest that is in default
as a result of expropriation.

local currency into guarantee currency, loan payments,
dividends, profits, and proceeds from the disposal of
the guaranteed investment; and (b) host government
actions that prevent the transfer of the guarantee
currency outside the host country, including the govern-

War and Civil
Disturbance

ment’s failure to authorize the conversion or the transfer of such currency. Compensation is based on theguaranteed percentage of any payments that cannot
be converted or transferred.

War and Civil Disturbance coverage protects against losses
arising as a result of military action or civil disturbance inthe host country, including sabotage and terrorism, that(a) destroys or damages tangible assets of the project
enterprise or interferes with its operations (business interruption); or (b) in the case of debt, results in the project
enterprise being unable to meet its obligations to the lender.
Compensation is based on the guaranteed percentage ofthe value of the assets destroyed or damaged or, in thecase of business interruption, the net book value of theguaranteed equity investment. For debt, compensation isbased on the guaranteed percentage of the principal andinterest that is in default as a result of war or civil disturbance.

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Credit Enhancement
Non-Honoring ofSovereign FinancialObligations
Non-Honoring of Sovereign Financial Obligations cover-Non-Honoringof Financial Obligations
by a State-Owned
Enterprise

age protects against losses resulting from a government’s failure to make a payment when due under an

Non-Honoring of Financial Obligations by a State-Owned

unconditional and irrevocable financial payment obliga-

Enterprise coverage protects against losses result-tion or guarantee given in favor of a project that other-ing from a state-owned enterprise’s failure to make awise meets all of MIGA’s normal requirements. It does

payment when due under an unconditional and irrevo-

not require the investor to obtain an arbitral award. This

cable financial payment obligation or guarantee given

coverage is applicable in situations when a sovereign’s

in favor of a project that otherwise meets all of MIGA’s

financial payment obligation is unconditional and notnormal requirements. It does not require the investor

subject to defenses. Compensation is based on the guar-

to obtain an arbitral award. This coverage is applicableanteed percentage of the amount that the guarantee

in situations where the financial payment obligation isholder is entitled to recover from the host government

unconditional and not subject to defenses. Compen-

pursuant to the terms of the obligation.

sation is based on the guaranteed percentage of theamount that the guarantee holder is entitled to recoverfrom the state-owned enterprise pursuant to the termsof the obligation.

MIGA has issued more than
$65 billion in guarantees
since its creation in 1988

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Terms ofCoverage*

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Investment Guarantee Guide

Pricing* This description is only a summary. It does notinclude all terms, conditions, and exclusionsof the policies described. Please refer to theactual policies for complete details of coverageand exclusions.

Premium rates are decided on a per project basis andvary by country, sector, transaction, and the type of riskinsured. Premiums are due at the beginning of eachcontract period.

Duration of Guarantee
MIGA provides coverage for more than 1 year and amaximum of up to 15 years (and possibly 20 years under
special circumstances). Once a guarantee is issued andeffective, MIGA may not terminate the contract except
in the case of noncompliance with the terms, conditions,and covenants of the MIGA contract, but the guarantee holder may reduce or cancel coverage without any
penalty on any contract anniversary date starting withthe third anniversary.
Sectors Supported by MIGA

Amount of Coverage

AgribusinessFor equity investments, MIGA typically guarantees up toCapital & Financial Markets

90 percent of the investment. For loans and loan guarantees, MIGA generally offers coverage of up to 95 percent

Energyof the principal (or higher as determined on a case-bycase basis). For non-equity direct contracts such as EPC

Extractive Industries

contracts, turnkey contracts, management contracts, andsuch similar contractual agreements, MIGA typically guar-Manufacturing & Services

antees up to 90 percent of the total value of payments
due under the project agreement and can guarantee up
to 95 percent.

Telecommunications
TourismTransport
Water

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Investment Guarantee Guide

The SmallInvestment
Program (SIP)

Investments in the financial sector are eligible under theSIP if they are geared toward providing financial services
for SMEs, and at least 50 percent of clients related to theinvestment are SMEs as defined above.

The SIP offers overage up to $10 million (the actual investC
ment may be bigger);

MIGA’s Small Investment Program (SIP) is designed tofacilitate investment into small and medium enterprises(SMEs) involved in the finance, agribusiness, manufacturing, and services sectors.
Investments are eligible for coverage under the SIP if they	A guarantee covering the risk(s) ofCurrency Inconvertibility and Transfer
Restriction, Expropriation, and/or War and Civil
Disturbance**;are related to the establishment of an SME, or made intoA streamlined approval process.

an existing SME, in a developing member country. To
qualify as an SME, the project enterprise must fulfill at
least two of the following criteria:

The SIP has no restrictions regarding the size of the investor.	Direct employment not to exceed 300 employees	Total assets not to exceed $15 million
 otal annual sales not to exceedT$15 million/year

Since 1988, MIGA has supported over900 projects in 120 countries** Breach of Contract and Non-Honoring of Financial Obligations coverages
are not offered under the SIP, but investors requiring these coverages may
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Investment Guarantee Guide

How to Apply
Applicants seeking MIGA coverage should submit
a completed Preliminary Application as soon asfeasible. There is no fee charged. Once investment
and financing plans are established, applicants submit
a Definitive Application along with any relevant project
documentation and a processing fee. Applications
may be submitted through MIGA’s website, by email,or by post.

MIGA Application Office
Mail Stop U12-1205
1818 H Street, NW
Washington, DC 20433, USA
Tel: +1 (202) 458-2538
migainquiry@worldbank.org

October 2021

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Investment Guarantee Guide

As a member of the World Bank Group, MIGA contributes to its twin goalsof ending extreme poverty and boosting shared prosperity by mobilizing
private investment into developing countries and supporting projects thatdeliver sustainable development impact.
MIGA-supported investments help bring jobs, innovation, technology, andskills transfer while also addressing climate change.

Follow MIGA:MIGA@MIGAMIGAWorldBankmiga.orgII