Concerns about political risk and liquidity have too often prevented private investors from investing in developing countries.
Recent breakthroughs in the application of political risk insurance and liquidity support are pointing a new way to easing such anxieties. MIGA political risk insurance, and an assurance of liquidity from EBRD, for example, recently contributed to a coveted two-notch bump in the rating of a bond issued to raise funds for a hospital PPP project in Turkey. As a result, a new and broader class of investors is now demonstrating interest in this, and similar projects.
If scaled up effectively, trillions of dollars currently sitting on the sidelines and earning little interest could be channeled to development projects through such innovations.
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The International Development Association (IDA) is the part of the World Bank that helps the world’s poorest countries. Established in 1960, IDA aims to reduce poverty by providing loans (called “credits”) and grants for programs that boost economic growth, reduce inequalities, and improve people’s living conditions.
IFC believes the Private Sector Matters for Development and that sound economic growth, driven by private sector development, is crucial to poverty reduction.
Join the conversation on Twitter with #PSDmatters, a hashtag conversation for people and organizations interested in and passionate about issues related to private sector development, particularly in emerging markets.