Trust Funds and Blended Finance
MIGA uses donor financing as an important tool to encourage cross-border investment into developing countries. Donor financing sits alongside MIGA’s own guarantee exposure to individual projects, through two administrative mechanisms:
The IDA-Private Sector Window (IDA-PSW): The IDA Private Sector Window is a $2.5 billion facility with the objective of making strategic use of public resources to catalyze private investments in challenging markets, by leveraging MIGA’s and IFC’s business models and client relationships. It complements IDA’s existing support for policy and business climate reforms. It was established as part of the IDA 18 replenishment cycle. Learn more about the IDA-PSW here.
MIGA utilizes the IDA-PSW through the MIGA Guarantee Facility (MGF), applying the funds either in the form of ‘first-loss’ exposure or as ‘risk-sharing akin to reinsurance’. Learn more about the MGF here.
The MIGA Strategic Priorities (MSP) Program:
MIGA also manages a series of donor-funded Trust Funds under an over-arching administrative framework - the MSP Program. These Trust Funds are financing arrangements set up with contributions from one or more development partners, and directed towards specific target areas that align with MIGA’s overall strategic priorities. The MSP Program provides a programmatic approach to integrate, streamline and manage the Trust Funds under a common framework and governance structure, creating administrative efficiencies and allowing for a consistent approach for strategy formulation, review, direction, and monitoring.
MIGA administers five individual Trust Funds, as detailed below. While some of them are established under the MSP Program, others are in the process of being folded into the MSP Program:
The Conflict-Affected and Fragile Economies Facility (CAFEF): Established in 2013, CAFEF supports MIGA guarantees in Fragile and Conflict-Affected Situations (FCS) by providing first and second loss layers (together “initial loss layer”) for guarantees issued. Learn more here.
Renewable Energy Catalyst Trust Fund (RECTF): Established in November 2021, the RECTF’s objective is to support renewable energy projects and projects tied to renewable energy such as mini-grid systems, transmission systems and battery storage. It provides solutions such as a first-loss layers, reinsurance, direct technical assistance or grants to facilitate the project development. A liquidity facility is currently under development. Learn more here.
Fund for Advancing Sustainability (FASTF): Established in January 2022, the FASTF’s objective is to enhance development impacts of MIGA projects and mitigate their risks by delivering direct technical assistance through third party service providers and technical assistance grants. Support from the FASTF is focused on the following five themes: supporting climate adaptation, resilience and benefits; enabling gender-related risk mitigation and scaling opportunities to close gender gaps; environmental and social aspects, and ‘Performance Standards’ compliance; enhancing corporate governance and legal capacity building; and enhancing management expertise to operate in fragile environments. Learn more here.
West Bank and Gaza Trust Fund: The West Bank and Gaza Trust Fund was established in 1997 to encourage private sector investment and economic development in the West Bank and Gaza —a Fragility, Conflict and Violence affected (FCS) territory—through the offering of political risk insurance (PRI) to both local and foreign investors. At present, the West Bank and Gaza is not a member of the International Monetary Fund, the World Bank, or MIGA, and is not eligible for the sources of financing normally available to these institutions’ member countries. To overcome such legal obstacle, the West Bank and Gaza Trust Fund is used to cover the full amount of guarantees underwritten in the West Bank and Gaza. Learn more here.
Support to Ukraine’s Reconstruction and Economy Trust Fund (SURE TF): The magnitude of damage caused by the war in Ukraine requires, in addition to budgetary and financial support for the government of Ukraine, high-leverage solutions that mobilize private capital to preserve economic activity and rebuild critical infrastructure. Given the heightened risks in Ukraine, MIGA blends donor financing from the SURE TF with its own risk capital, to enable guarantee issuance in the country. The SURE TF, which was established with Japan as the anchor donor, has a target size of up to $300 million. Learn more about the SURE TF here.