GUARANTEE BASICS Q: What products does MIGA provide under its guarantee program? A: MIGA provides political risk insurance (or guarantees) for investments made in developing countries. MIGA's guarantees protect investors against the risks of currency transfer restriction (including inconvertibility), expropriation, war and civil disturbance, and breach of contract. Q: Who is eligible for a MIGA guarantee? A: In general, investors who are citizens of MIGA member countries other than the country in which the investment is being made (called host country) are eligible for MIGA guarantees. However, MIGA can insure an investment made by a national of a host country if the funds to be invested come from outside the country and the application for coverage is made jointly by the investor and the host country. MIGA can also insure investments made by state-owned enterprises that operate on a commercial basis, and those made by enterprises partially owned by the government. Q: What is the typical term of a MIGA guarantee? A: MIGA issues guarantees for periods of up to 15 years, and occasionally, 20 years. The agency usually issues coverage to match the length of a loan. Q: Can MIGA cancel a guarantee? A: Yes, but only if the investor breaches its contractual obligations. Q: Can a guarantee holder cancel a guarantee? A: Yes, but only after the first three years of coverage. Q: Does MIGA finance projects? A: No, MIGA only provides political risk insurance. Q: Does MIGA provide export credit insurance? A: No, MIGA covers only equity interests, loans Related to an investment project (shareholder and non-shareholder), and certain types of transactions in which the investor's remuneration depends on the revenues or production of the investment project. Q: Does MIGA disclose its guarantees to the public? A: Yes, once a guarantee is issued, MIGA discloses limited information: name of the investor, host country, brief project description, risks covered, and amounts insured. Proprietary information is not disclosed without investor approval. For certain types of projects, an environmental assessment is made public before the investment is submitted to MIGA's Board of Directors for approval. INVESTMENTS COVERED Q: What types of investments are eligible for MIGA guarantees? A: Investments must be new and of at least three years in duration. New investments include start-ups, those associated with the expansion, modernization, or financial restructuring of existing projects, and acquisitions involving privatization of state enterprises. Projects eligible for guarantees must comply with MIGA's environmental guidelines and standards relating to labor conditions and corruption. Projects must also be financially viable and support the host country's development goals. Q: What sectors are eligible for MIGA guarantees? A: Most sectors are eligible for MIGA guarantees, including (but not limited to) financial, infrastructure, oil and gas, mining, telecommunications, services, agribusiness, and manufacturing. Sectors not eligible include gambling, tobacco production and processing, highly speculative investments, defense, illegal drugs, and the production of alcohol and spirits. Q: Can MIGA provide coverage to a third-party lender (i.e., a financial institution)? A: In principle, MIGA can only cover loans made by an equity holder in a project enterprise. However, coverage may be extended to loans made by a non-shareholder provided that MIGA has covered or will cover any other form of eligible investment in the project enterprise. RISK COVERAGE Q: What factors does MIGA consider when making a risk assessment? A: In addition to country risks, MIGA considers project risks, including location, project visibility, the sector and its importance for the host country, potential for earning export proceeds in freely usable currency, and participation of local partners as well as domestic and multilateral institutions. Q: Can an investor ask MIGA to cover just one type of risk? A: Yes. In the case of breach of contract coverage, however, MIGA generally requires investors to purchase coverage in combination with one or more other types of guarantees. Once a contract is issued, additional coverage may not be purchased. Q: Can MIGA issue a guarantee against commercial risks, such as commercial insolvency? A: No, MIGA provides insurance against non-commercial risks only. PROJECT AND COUNTRY LIMITS Q: Does MIGA have country limits? A: Yes. MIGA has set limits of $620 million per country. However, MIGA works closely with public and private insurers, using, for example, treaty and facultative reinsurance as well as coinsurance to augment its capacity limits. Q: Does MIGA have minimum and maximum project size limits? A: There is no minimum size limit for a project. At present, MIGA can cover up to US$200 million per project, which may be supplemented through coinsurance and reinsurance. APPLYING FOR A MIGA GUARANTEE Q: When should an investor approach MIGA for a guarantee? A: Since MIGA covers only new investments, applications should be submitted before an investment is irrevocably committed. Q: How does an investor apply for a MIGA guarantee? A: Applicants first submit a confidential two-page preliminary application, which can be accessed at www.miga.org. MIGA staff determine within 48 hours whether a project is eligible for coverage, register the project, and send the client a definitive application. The client then provides more detailed information. Q: How long does it take to get a guarantee? A: Depending on the project's complexity, MIGA typically issues guarantees within four months of receiving a definitive application. Q: Does MIGA charge an application fee? A: While there is no charge for filing a preliminary application, MIGA does charge a fee to register definitive applications. If a guarantee is offered and accepted, the fee is credited toward the first premium payment. If MIGA declines to offer coverage, the fee is refunded. If the investor decides not to purchase the coverage, MIGA retains the fee. MIGA may charge an additional processing fee for particularly complex projects. MIGA AND THE WORLD BANK GROUP Q: What is the difference between a MIGA guarantee and a World Bank guarantee? A: The main difference is that the World Bank requires a counter-guarantee of the host government. For details, see http://www.worldbank.org/html/fpd/guarantees/. Although MIGA doesn't require a counter-guarantee, it does request host country approval before issuing a guarantee. Q: Must the International Finance Corporation or the World Bank be involved in a project for MIGA to provide a guarantee? A: No, MIGA can insure investments in projects with or without the involvement of another member of the World Bank Group. CLAIMS Q: How many claims have been filed with MIGA? MIGA has received only one claim to date, which has been paid. MIGA has also resolved a number of pre-claim situations. 
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