Cullen Michael: International Finance Agreements Amendment Bill — Second Reading 
Cullen Michael: International Finance Agreements Amendment Bill — Second Reading 
[Volume:641;Page:11695] 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 I move  
That the International Finance Agreements Amendment Bill be now read a second time 
. Following the first reading the bill was examined by the Foreign Affairs Defence and Trade Committee which recommended that it be passed with no amendments. 
The bill will amend the International Finance Agreements Act 1961. That Act allows the Government of New Zealand to meet its obligations as a member of various financial institutions including the International Monetary Fund and the International Bank for Reconstruction and Development. This bill is the next step towards New Zealand becoming a member of the Multilateral Investment Guarantee Agency which is one of the five institutions that make up the World Bank Group. Currently this is the only arm of the World Bank Group of which New Zealand is not a member. To become a member of the Multilateral Investment Guarantee Agency New Zealand first had to become a party to the Convention Establishing the Multilateral Investment Guarantee Agency which we signed up to in late 2005. 
As a member of the World Bank Group the Multilateral Investment Guarantee Agency contributes to the World Bank’s mission of poverty elimination and achievement of the United Nations Millennium Development Goals. The Multilateral Investment Guarantee Agency provides specifically targeted insurance products that seek to mobilise private sector resources to help in addressing stark development challenges such as the provision of services the building of infrastructure and the creation of new jobs. The Multilateral Investment Guarantee Agency’s products are equity investments targeted at frontier markets such as developing countries or countries affected by civil dispute or war. These products are usually of a longer duration than those offered by private sector providers of similar products. Thus these products aim to support rather than crowd out private sector providers. Indeed in many instances they lead private sector providers into developing countries and particularly countries that are rebuilding after civil dispute or war. 
The convention has been through a national interest analysis which concluded as follows. First New Zealand is fully supportive of the Multilateral Investment Guarantee Agency as its services are well aligned with our broader development interests and to a lesser extent our foreign policy interests. Second the assessment as to whether New Zealand should join the Multilateral Investment Guarantee Agency was based on three broad categories: supporting the New Zealand private sector contributing to development goals and supporting multilateral organisations. Third by ratifying the Multilateral Investment Guarantee Agency convention New Zealand is strengthening its commitment towards international efforts to promote development and is improving its credibility within the total World Bank Group structure. The select committee I think endorsed that national interest analysis and concluded that the bill should proceed. 
Assuming that the International Finance Agreements Amendment Bill is passed New Zealand will be required to deposit a copy of the Act with the World Bank. We will then be required to pay a subscription fee which will involve the purchase of 513 shares at a cost of approximately US$5.5 million. Of that amount 10 percent is in cash 10 percent is via a promissory note and the remaining US$4.4 million will be subject to call by the Multilateral Investment Guarantee Agency. The fund is unlikely to be called upon as a call would require the agreement of all shareholders. Thus for a relatively small investment in terms of our total overseas aid activity we complete in effect our membership of the World Bank Group.