MIGA-IDB Invest Trade Finance Guarantee Facility (MIGA-15261)

Regions
  • Latin America and Caribbean
Geographic location where the impacts of the investment may be experienced.
Financial Institutions
  • Multilateral Investment Guarantee Agency (MIGA)
International, regional and national development finance institutions. Many of these banks have a public interest mission, such as poverty reduction.
Project Status
Proposed
Stage of the project cycle. Stages vary by development bank and can include: pending, approval, implementation, and closed or completed.
Bank Risk Rating
C
Environmental and social categorization assessed by the development bank as a measure of the planned project’s environmental and social impacts. A higher risk rating may require more due diligence to limit or avoid harm to people and the environment. For example, "A" or "B" are risk categories where "A" represents the highest amount of risk. Results will include projects that specifically recorded a rating, all other projects are marked ‘U’ for "Undisclosed."
Borrower
IDB Invest
A public entity (government or state-owned) provided with funds or financial support to manage and/or implement a project.
Sectors
  • Finance
The service or industry focus of the investment. A project can have several sectors.
Investment Type(s)
Guarantee
The categories of the bank investment: loan, grant, guarantee, technical assistance, advisory services, equity and fund.
Investment Amount (USD)
$ 500.00 million
Value listed on project documents at time of disclosure. If necessary, this amount is converted to USD ($) on the date of disclosure. Please review updated project documents for more information.
Project Cost (USD)
$ 500.00 million
Value listed on project documents at time of disclosure. If necessary, this amount is converted to USD ($) on the date of disclosure. Please review updated project documents for more information.
Primary Source

Original disclosure @ MIGA website

Updated in EWS Sep 20, 2024

Disclosed by Bank May 16, 2024

Contribute Information
Can you contribute information about this project?
Contact the EWS Team

Project Description
If provided by the financial institution, the Early Warning System Team writes a short summary describing the purported development objective of the project and project components. Review the complete project documentation for a detailed description.

According to the Bank’s website, this summary covers a proposed framework arrangement with the private sector arm of the Inter-American Development Bank Group, IDB Invest, in order to support trade finance transactions conducted through state-owned banks in joint member countries in Latin America and the Caribbean (LAC). MIGA would provide IDB Invest with up to US$500 million in trade finance guarantees (TFGs) covering the non-payment risk of eligible state-owned banks (SOBs) for which IDB Invest's Trade Finance Facilitation Program (TFFP) would issue payment guarantees or short terms loans specifically related to trade transactions. The proposed TFG facility would have a tenor of up to 6 years (with an initial 3-year term).

The Project is expected to provide capacity to IDB Invest as it seeks to mobilize trade financing for exporting and importing companies in LAC, supporting their internationalization, and ensuring liquidity in times of volatility and uncertainty. Trade credit and finance are essential to the economic health of developing countries as it contributes to their export competitiveness, employment, and growth. Despite the benefits, according to the Asian Development Bank (ADB)[1], the global trade finance gap is estimated at US$1.5 trillion of which US$350 billion is in LAC. Access to trade finance in the region is particularly difficult for Micro, Small and Medium Enterprises (MSMEs) which are a key source of employment. The IDB Invest, through the TFFP, has been helping close the trade finance gap in the region, and since 2020, is working to increase its focus on various thematic areas that contribute to the Sustainable Development Goals (SDGs)[2]such as SMEs, green finance, women-led companies, and food security, to which the MIGA guarantee will contribute to.

Early Warning System Project Analysis
For a project with severe or irreversible impacts to local community and natural resources, the Early Warning System Team may conduct a thorough analysis regarding its potential impacts to human and environmental rights.

The MIGA-covered facility will support short-term trade transactions in the LAC region. These transactions pose minimal environmental and social (E&S) risks and impacts and as such, the project has been categorized as 'FI-3' in accordance with MIGA's Policy on Environmental and Social Sustainability (2013). The applicable E&S requirements for this project are the MIGA Exclusion List and compliance with applicable E&S host country laws. The SOBs will also be required to comply with the labor requirements specified under MIGA Performance Standard 2: Labor and Working Conditions.

Investment Description
Here you can find a list of individual development financial institutions that finance the project.

MIGA would provide IDB Invest with up to US$500 million in trade finance guarantees (TFGs). The proposed TFG facility would have a tenor of up to 6 years (with an initial 3-year term).

Financial Intermediary
A financial intermediary is a bank or financial institution that receives funds from a development bank. A financial intermediary then lends these funds to their clients (private actors) in the form of loans, bonds, guarantees and equity shares. Financial intermediaries include insurance, pension and equity funds. The direct financial relationship is between the development bank and the financial intermediary.
Private Actors Description
A Private Actor is a non-governmental body or entity that is the borrower or client of a development project, which can include corporations, private equity and banks. This describes the private actors and their roles in relation to the project, when private actor information is disclosed or has been further researched.

IDB Invest is a private sector arm of the Inter-American Development Bank Group.


Contact Information
This section aims to support the local communities and local CSO to get to know which stakeholders are involved in a project with their roles and responsibilities. If available, there may be a complaint office for the respective bank which operates independently to receive and determine violations in policy and practice. Independent Accountability Mechanisms receive and respond to complaints. Most Independent Accountability Mechanisms offer two functions for addressing complaints: dispute resolution and compliance review.

ACCESS TO INFORMATION

You can submit a request for information disclosure at: https://www.miga.org/contact/access_to_information

You can also request general information about MIGA and for information on guarantees by emailing: migainquiry@worldbank.org

ACCOUNTABILITY MECHANISM OF IFC/MIGA

The Compliance Advisor Ombudsman (CAO) is the independent complaint mechanism and fact-finding body for people who believe they are likely to be, or have been, adversely affected by an IFC or MIGA- financed project. If you submit a complaint to the CAO, they may assist you in resolving a dispute with the company and/or investigate to assess whether the IFC is following its own policies and procedures for preventing harm to people or the environment. If you want to submit a complaint electronically, you can email the CAO at CAO@worldbankgroup.org. You can learn more about the CAO and how to file a complaint at http://www.cao-ombudsman.org

How it works

How it works