Functional Role of International Financial Institutions for Structuring Project Financing – Opportunities and Limitations

Authors:

Pages: 101-108

Abstract:

Increasing investment activity is one of the main tasks for most modern market macrosystems integrated into global economic relations. One of the most functional multi-instrumental forms of large investments in real assets is the technique of project financing. A characteristic feature of the structure of “transactions” for project financing is their supranational nature. The migration of capital, goods and services exacerbates economic asymmetries and adds to the usual project risks and political risk. This may negatively affect the processes of validation and development of project financing techniques in countries with underdeveloped markets. The study aims to take into account significant manifestations of political risk, as well as to reveal the role of international financial institutions in increasing the security of foreign investors in project financing transactions. The subject of the article is the possibilities, tools and techniques for minimizing political risk, and the accompanying limitations.

Keywords:

project financing, political risk, multilateral development bank, guarantee products, cofinancing operations.

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