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Chapter: 11th 12th std standard Indian Economy Economic status Higher secondary school College

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IFC, IDA, MIGA

International Finance Corporation (IFC), International Development Association (IDA), The Multinational Investment Guarantee Agency (MIGA)

International Finance Corporation (IFC)

 

The IFC was set up in July 1956, as an affiliate of the World Bank. It was set up with the objective of assisting the private enterprises in developing countries by providing them risk capital. The IFC provides debt and equity finance to projects sponsored by the private sector developing countries.

 

Though IFC is affiliated to World Bank, it is a separate legal entity with a separate fund and functions. Members of IBRD are eligible for its membership.

 

Objectives

 

In association with private investors, to invest in productive private enterprises without government guarantee of repayment.

 

It serves as a clearing house, to bring together investment opportunities, private capital and experienced management.

 

To help in stimulating productive investment of private capital both at home and abroad.

 

Industrial, agricultural, financial, and commercial and other private enterprises are eligible for IFC financing. Their operations are productive and contribute to the development of the economy. It does not follow a policy of uniform interest rate for its investment. It is subject to negotiation.

 

International Development Association (IDA)

 

IDA was set up in September 1960, as a subsidiary of the World Bank. The establishment of IDA was another step in the direction of increasing international liquidity in the world. The IDA was set up particularly to provide finance to less developed countries on a soft loan basis ie. on terms imposing lower servicing charge on loans than the conventional bank charges.

 

Objectives

 

To promote economic development

 

To increase productivity

 

To raise standard of living in the member countries

Furthering the developmental objectives of the World Bank and supplement its activities.

 

To provide finance to the member countries to meet their important development requirements. IDA loans can

 

be utilized to finance both foreign exchange and local currency costs.

 

The Multinational Investment Guarantee Agency (MIGA)

 

MIGA is the new affiliate of the World Bank family and was established in 1988. It has an authorized capital of $ 1.08 billion.

 

Objectives

 

To encourage the flow of direct foreign investment into developing member countries.

 

It provides insurance cover to investors against political risks.

 

It insures only new investments.

 

Promotional and advising services are provided to increase the attractiveness of the investment climate.

 

MIGA's guarantee serves as a catalyst for multinational investments.


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