CS Professional · Strategic Management and Corporate Finance · Foreign Funding - Institutions
Sagar Textiles Ltd, an Indian manufacturer, wants long-term project finance from a multilateral agency that insures foreign investors against non-commercial risks such as expropriation, currency inconvertibility and war in the host country. Which World Bank Group member offers this guarantee function?
The Multilateral Investment Guarantee Agency, part of the World Bank Group, provides political risk insurance against expropriation, currency inconvertibility, war and similar non-commercial risks. ICSID only settles disputes, and IBRD and ADB are lenders rather than guarantee providers for foreign investors.
- AInternational Centre for Settlement of Investment Disputes (ICSID)
- BMultilateral Investment Guarantee Agency (MIGA)Correct
- CInternational Bank for Reconstruction and Development (IBRD)
- DAsian Development Bank (ADB)
Explanation
MIGA provides political risk insurance and credit enhancement to cross-border investors and lenders, covering risks such as expropriation, transfer restriction and war. ICSID only offers conciliation and arbitration of investment disputes, not insurance. IBRD lends to middle-income governments and ADB is a regional bank, not the insurer in the World Bank Group.
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