The Swedish International Development Cooperation
Agency’s (Sida) move to act as guarantor of
sovereign loans in Asia is a first in the multilateral
financing world, and a one that market participants hope will
be replicated globally.
Not only is a risk transfer instrument a recent development
for multilateral funding – the Swedish Ministry of
Foreign Affairs (MoFA) only authorised its use in the past year
– its deployment is also innovative. In its first
iteration, Sida’s agreement with the Asian
Development Bank (ADB) will help the lender free up loaning
resources so it can reach stated funding goals.
Sweden has agreed to step in to support investment in
India"Normally, a guarantee is about reducing investment risk
or lowering borrowing costs," said Samuel Hurtig, head of
division, support unit for Asia at Sida. "In this instance,
it’s about supporting further investment from the
ADB and maximising the use of existing capital."...