The World Bank Group offers a range of investment guarantees, hedging and political risk insurance products to boost direct foreign investment in developing countries. The Bank Group's guarantees and risk management products open up new investment opportunities for businesses in developing countries by covering risks the private market is unable to bear.

• IBRD and IDA Guarantees
  Risk-mitigating products, or guarantees, help encourage private capital flows through commercial lenders to emerging market countries. They provide a degree of protection against critical government-performance risks that private lenders are reluctant to assume. The bank's Project Finance and Guarantees Department, part of the Infrastructure Network, offers three types of guarantees to commercial lenders:
  
  
  • Partial Credit Guarantees cover a portion of scheduled repayments of private loans or bonds against all risks. These guarantees are usually provided for privately funded public projects.
  • Partial Risk Guarantees cover debt service defaults on loans for private-sector projects that are caused by government failures to meet contractual obligations.
  • Policy Based Guarantees cover portions of the debt service on funds borrowed by eligible member countries from private foreign creditors in support of agreed upon structural, institutional and social policy reforms.
    
    
• IBRD Hedging Products
  World Bank (IBRD) hedging products, such as interest rate swaps, interest rate caps and collars, currency swaps and, on a case-by-case basis, commodity swaps, can address borrowers' changing needs during the life of their IBRD loans by effectively transforming their loan obligations. They provide borrowers with the means to manage risk for projects, lending programs and sovereign asset-liability management.
  
  
• MIGA Investment Guarantee Services
  Multilateral Investment Guarantee Agency (MIGA) guarantees can help investors and lenders deal with the political risks that may accompany investment in emerging markets by insuring eligible projects against losses. Investment guarantees provide protection against non-commercial risks-expropriation, currency transfer restrictions, breach of contract-as well as war and civil disturbance, and cover both equity investments and related loans. MIGA also operates a Small Investor Program that offers streamlined services to small and medium-sized companies investing in the developing world.
  
  
• IFC Risk Management Products and Services
  International Finance Corporation (IFC) promotes the growth of productive private enterprise and efficient capital markets in member countries. To foster that growth in emerging market companies and financial institutions, it offers a variety of risk management products or derivatives, for hedging purposes. By offering private sector clients in the emerging markets access to the international derivatives markets so they can hedge their currency, interest rate, or commodity price exposure, IFC enables companies to enhance their creditworthiness and improve profitability. IFC tailors its risk-management products to meet the specific needs of its developing country clients.

Updated: May 2006