MIGA and Georgia’s Investment Risk Management Agency Join Efforts to Promote Foreign Investment
TBILISI, August 31, 2009 - The Multilateral Investment Guarantee Agency (MIGA), the political risk insurance arm of the World Bank Group, and Georgia’s Investment Risk Management Agency (IRMA), today signed a Memorandum of Understanding aimed at promoting foreign direct investment (FDI) into the country. According to the Georgian Statistics Department, FDI into Georgia fell to $124.7 million in the first quarter of 2009, down from $537.6 million in the same period last year.
Under the memorandum, MIGA and IRMA will work together to establish a joint outreach program targeting foreign investors in Georgia. For its part, IRMA will provide information regarding MIGA’s products and services to eligible foreign investors in Georgia and provide risk assessment services for proposed investments. MIGA may provide political risk insurance for eligible investors and projects and will train key IRMA personnel and provide technical assistance for the development of risk-mitigation products and instruments.
Kakha Baindurashvili, the Minister of Finance of Georgia, explained the importance of mitigating political risks in promoting a favorable investment climate in Georgia: “attracting foreign direct investment is a key component of the economic policy being implemented by the government of Georgia. The economic reforms cover many aspects to provide the private business sector with different incentives and basis for successful development. Easy access to mitigating political risks will stimulate foreign investment activities which are very essential to economic growth and development in Georgia.”
“IRMA is in a very strong position to promote MIGA’s products in Georgia and facilitate acquisition of political risk insurance by foreign investors,” asserted Zurab Simonia, Director of the Investment Risk Management Agency. “The risk-mitigation products created via close cooperation between the two agencies will definitely be an incentive to the foreign investors and contribute towards more efficient and effective investment decision-making.”
Izumi Kobayashi, MIGA’s Executive Vice President, noted the objectives of the two agencies are complementary. “Joining MIGA’s and IRMA’s efforts to encourage and promote foreign direct investment in Georgia is particularly important in an environment where the global economic crisis has resulted in a number of significant shocks to the country’s growth and stability. We look forward to working together in order to bring good projects to Georgia that foster sustainable development and improve people’s lives.”
MIGA was created in 1988 as a member of the World Bank Group to promote foreign direct investment into emerging economies to support economic growth, reduce poverty, and improve people’s lives. MIGA fulfills this mandate by offering political risk insurance (guarantees) to investors and lenders, covering risks including expropriation, breach of contract, currency transfer restriction, and war and civil disturbance. MIGA works actively with investors and host countries, helping to resolve disputes before they reach a claims situation. The agency also offers technical assistance to its member countries and provides free online investment information services. Since its inception, MIGA has supported 600 projects in 100 developing countries, totaling more than 20 billion in coverage. MIGA’s gross exposure stands at $7.3 billion.
IRMA was established as a government agency under the supervision of the Ministry of Finance of Georgia on March 23, 2009 to provide foreign investors with high quality political risk management services. The agency acts as an intermediary between the potential foreign investors and the foreign state agencies (ECA) offering political risk insurance (PRI) to their citizens. IRMA aggressively promotes insurance/finance products offered by different foreign ECAs in Georgia. It assists foreign investors in the political risk assessment and facilitates acquisition of the PRI to mitigate such risks efficiently and effectively.
IRMA’s goal is to contribute towards economic growth and development by means of promoting foreign investment in Georgia and assist foreign investors in realizing their business outcomes. It offers services that facilitate communication between the investors and ECAs which is an important factor for successful business dialogue and effective decision-making.