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Policies of Bi-laterals and other Donor Institutions in financial Local Government Infrastructure

Policies of Bi-laterals and other Donor Institutions in financial Local Government Infrastructure. The European Bank for Reconstruction and Development. IADF Conference: 1 October 2004. What is the EBRD?.

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Policies of Bi-laterals and other Donor Institutions in financial Local Government Infrastructure

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  1. Policies of Bi-laterals and other Donor Institutions in financial Local Government Infrastructure The European Bank for Reconstruction and Development IADF Conference: 1 October 2004

  2. What is the EBRD? • International financial institution, promotes transition to market economies in 27 countries from central Europe to central Asia • Owned by 60 countries, the EU and the EIB • Capital base of €20 billion Cumulative commitments €24.1 billion Unaudited June 2004

  3. Total local expenditure EUR 31 billion / 8.6% of GDP Total GDP of Mexico EUR 816 billion Total GDP Accession States EUR 363 billion Market Size ---Local Authorities in EE

  4. EBRD’s role in the municipal sector • Structuring the financing of municipal infrastructure, equipment and services • Promote commercialisation and corporatisation of services • Development of regulatory structures • Promotion of appropriate private sector involvement • Environmental improvement • Facilitate EU grant and commercial loan co-financing EBRD helps municipalities meet their infrastructure needs

  5. EBRD financing of municipal infrastructure • €1.9 billion committed to €5 billion in investment • Projects in over 120 municipalities • Over 30 million population served by EBRD-financed municipal projects • €531 million operating assets • €800 million under appraisal • Trend towards non-sovereign and private financing • 10% Sovereign • 20% PPP • 70% Municipal EBRD’s municipal projects have had a successful track record since 1996 Figures as of October 2003

  6. Co-financing track record --- commercial • Commercial banks frequently co-finance EBRD projects under A/B and other loan structures • EBRD involvement enhances municipal risk profile • Syndication raises municipality’s international profile • €300 million syndication: • municipal operations (€160 million) • PPPs (€140 million)

  7. Lessons learned (i) • Municipal business has systemic risks: focus on key markets • Weak institutional/legal frameworks lengthen lead times significantly • Secondary cities are often best partners • Municipalities are not the only partners --- regional authorities are important • Good management of triangular relationship Bank-Government-Local Authority --- need for a “champion of reform”

  8. Lessons learned (ii) • Establish strategic relationships with interested commercial banks • Overall country perception hides a wide range of local authority quality • Graduation based on track record mitigates risks (and local authorities are interested in publicity of municipal loans, which come at a cost) • Average investment size tends to be small

  9. How to contact us • Thomas Maier, Director, Municipal and Environmental Infrastructure Tel: +44 20 7338 7924 / fax: +44 20 7338 6964 Email: maiert@ebrd.com • General enquiries Tel: +44 20 7338 6372 / fax: +44 20 7338 6102

  10. www.ebrd.com

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