How does the Banks guarantee differ from MIGA insurance?
There are a number of differences. MIGA can cover equity, shareholder loans and loan guarantees issued by equity holders; it can also cover loans by unrelated institutions, usually commercial banks, provided that a shareholder’s investment in the project is also being insured by MIGA. Like other investment insurers, MIGA can provide broad coverage to investors against such risks as currency transfer, war and civil disturbance, and expropriation; it can customize these coverages to suit the particular needs of investors. MIGA can normally issue coverage within a few months of an investor’s application since it does not enter into counter-guarantee arrangements with the host country government of the project. The Bank, by contrast, guarantees debt service-not equity-typically against default caused by specifically defined events for each project. It can provide tailored coverage of specific risks.
