Multinationals Present Opportunities for County Investment

At the fall 2016 meeting of the Maryland Government Finance Officers Association, Mary Christine Jackman, Director of Treasury Management of the Maryland Office of the Treasurer presented on the supranational funds available now to county governments, following legislation passed in the General Assembly this year.

MACo supported the legislation to allow county government investment in supranationals and coordinated testimony by counties on the bill’s hearings in the Maryland House and Senate.

screenshot-2016-10-14-13-11-46In her presentation, SB1119 & You, or Supranationals: Taking a Closer Look, Jackman described a ten year effort to open up this type of investment to counties. The legislation passed in the spring, was signed into law by the Governor and is effective as of this October.

According to Jackman, the types of investment eligible to county governments include:

  • US Treasury Obligations
  • Money Market Mutual Funds
  • Maryland Local Govenment Invest
  • Approved supranationals
  • and others

Approved supranationals include the World Bank, the International Finance Corporation, the Inter-American Development Bank, and others. All of these banks are heavily invested in by the US Govenment and they all use USD currencies.

George Richardson, head of Capital Investment at the World Bank, gave some background on supranational investment, including showing a video on bus transportation project in the country of Columbia. He thanked the State of Maryland for passing the legislation, SB1119, and recognized the leadership of Mary Christine Jackman.

Richardson offered individualized presentations on World Bank investment to any interested counties. He also described why supranationals were not downgraded from AAA when the S&P downgraded US debt ratings. The rating is based on the strong balance sheet of the World Bank, rather than project-by-project, and the emerging markets that the World Bank invests in are the largest emerging markets, Richardson said. The World Bank has conservative financial policies, and risk management, and has support from 189 countries.

Responding to a question regarding risk, and noting defaults by Iceland, Richardson stated that countries like Iceland, and even Greece are considered too rich for World Bank investment. No one has ever defaulted on the World Bank, they may go into arears indefinitely, but they always pay up.

Another questioner stated that it is a hard sell to move taxpayer dollars into the World Bank, instead of investing in local banks who are local employers that give back to the local community and finance local investments such as schools. Jackman responded that this is an additional option for investing. She said that the World Bank has AAA credit, and the rates are highly competitive, but the decision is up to your community and what is right for you.

For more information, see the previous post, Supranational Investing Bill Moves in Senate.