MIGA now wants India to use its credit guarantee instruments to crowd in private investors in development projects, not just at home but also in other developing countries, they indicated.
“India is the best place to deploy guarantees. There is a huge need for infrastructure development. So, we did two transactions in the past six months. That’s very unique. We want to use it more here,” MIGA executive vice president Hiroshi Matano said, suggesting that there was “plenty of room” available for India to raise resources and find collaborations. Greater collaboration between MIGA and India also coincides with India’s emergence as a leader of developing countries, Matano indicated. Energy, water, and infrastructure sectors are potential areas of deeper engagement with India, he said.
Earlier, MIGA had supported only one small project in India in 1997. But over the last six months, it signed up for a $317.5-million solar refinancing project with State Bank of India and a $132-million plan with Dedicated Freight Corridor Corporation.
MIGA is holding discussions with senior Indian government officials as to how to strengthen the partnerships and allocate funds where they are most required, Matano said.Talks with SIDBI
Junaid Kamal Ahmad, vice-president (operations) at MIGA, said the organisation will soon have talks with Small Industries Development Bank of India- (SIDBI), which can use its guarantee to finance small and medium enterprises engaged in various development projects.
Ahmad said MIGA’s credit guarantees are bolstering the “leveraging part of the World Bank group and complementing the lending part.” He said Indian state-run financing entities, including SBI, could use MIGA guarantees to support projects in other developing countries. “Every dollar of our economic capital that we put into a guarantee, we crowd in close to $20 of private finance,” Ahmad said.
“There are those state-owned enterprises that are better suited for the domestic market (investment) and then there are those that are better suited to go abroad. Our purpose is to support platforms for scale and impact,” he said.
Private capital in climate transition
Developing countries, said Matano, need trillions of dollars for climate change initiatives, and it would be impossible for multilateral agencies or the public sector alone to raise that much of resources. This warrants large-scale deployment of private capital that can be facilitated by MIGA through its guarantee instruments, he suggested.