Risk Mitigation Instruments for Infrastructure Financing
On Monday, July 30th, the Bretton Woods Committee and the U.S. Commercial Service held a luncheon on Risk Mitigation Instruments for Infrastructure Financing. Recently, infrastructure projects have come back into favor at the World Bank; however, developing countries face significant challenges when it comes to involving the private sector in financing such projects. At the luncheon, the Committee heard presentations from World Bank staff on the range of financial products that the Bank provides to make private participation in infrastructure more attractive.
Daniel J. Bloom, Director of the Advocacy Center at the U.S. Department of Commerce welcomed participants to the luncheon and introdced Laszlo Lovei, Director of Finance, Economics & Urban Development at the International Bank for Reconstruction & Development (IBRD).
Ellis Juan, Manager of Finance, Economics & Urban Development at the IBRD spoke on Mobilizing Private Capital and Management into Infrastructure Development. Mr. Juan discussed the Partial Credit Guarantees (PCG) and Partial Risk Guarantees (PRG) offered by the IBRD and the International Development association (IDA). In a case study, he presented the role of these instruments in the privatization of power distribution in Romania.
Phillipe Valahu, Acting Director of Operations at the Multilateral Investment Guarantee Agency (MGIA) discussed MIGA's role in Supporting Foreign Direct Investment (FDI) in Infrastructure for Underserved Markets. Mr. Valahu pointed out that MIGA is typically active in low income countries where foreign investment is hard to come by. He presented three cases where MIGA has been able to help finance infrastructure projects by increasing the projects' marketability.
Lee Meddin, Deputy Treasurer & Global Head of Structured Finance at the International Finance Corporation (IFC) discussed the Risk Mitigation Solutions offered by the IFC. Whereas the IBRD and IDA deal primarily with sovereign risk, the IFC deals with risk in the private sector. Mr. Meddin gave examples of some of the situations that U.S. companies operating abroad could face, and explained the solutions offered by the IFC.
After a question and answer period, Whitney Debevoise II, the U.S. Executive Director to the World Bank offered some concluding remarks and thanked the presenters and participants.