Financing Mechanisms at the Subnational Level in Emerging Markets

Author

Darche, Benjamin

1997

Number of Pages:

Full Text

Financing Mechanisms at the Subnational Level in Emerging Markets: Borrowings and Privatizations/Concessions

Abstract

This note reviews the current borrowing trends for subnational entities (e.g., provinces, states and

municipalities) in developing countries where-in addition to the traditional municipal credit institutions sponsored

by central governments-a number of new financing instruments have been developed based on the security

provided by intergovernmental transfers and taxing authority. It also reviews the trends in privatization and

concession of urban infrastructure (primarily transportation toll facilities and water/sewer systems) which have

led to an increased demand for domestic and international financing. It finally discusses possible future

directions for subnational financing through borrowings and privatizations/concessions in domestic and foreign

private financial markets.