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Removing financing obstacles through project structuring

Learn how project preparation and structuring can remove financing obstacles for water projects, leveraging synergies and maximizing local resources. Presented at the IV World Water Forum by Antonio Vives from the Inter-American Development Bank.

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Removing financing obstacles through project structuring

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  1. Removing financing obstacles through project structuring Access toFinancefor Local Governments IV WorldWaterForum March 17, 2006 Antonio Vives Manager, a.i. Sustainable Development Department Inter-American Development Bank

  2. Outline of the presentation • Project preparation • Project structuring

  3. Project finance cycle Preparation Structuring NEEDS Financing

  4. Project preparation • One of the major obstacles to water and sanitation finance is project preparation • Low institutional capacity • A local affair, sometimes removed from decision making centers • Difficult political and economic conditions • Scarcity of financial resources: users, taxpayers, markets • Project preparation not given the key role

  5. Project preparation • Donors and multilaterals financial institutions must emphasize support for the early stage. • We at the IDB hope to approve on Monday a Project Preparation Fund with grants for capacity building and project preparation • Donors should consider “debt for water swaps” as part of their official assistance. • Both would leverage other funds: “teach them how to fish instead of giving them fish”

  6. Project structuring • Financial structures adapted to local realities • Exploit all possibilities to maximize synergies between scarce resources: own labor, tariffs, donors, multilaterals, public and private resources • At one extreme, cooperatives, water microenterprises, municipal utilities • In the middle, management contracts, for operation, maintenance, collections, etc. • At the other extreme, full-fledged concessions

  7. Project structuring: local conditions • Willingness to pay/local views • Tariff sustainability • Site and location • Institutional capacity • Fiscal space • Legal framework • Political risk • Macroeconomic conditions

  8. Local conditions

  9. Water financing model Sesión FT3.40, Domingo 19 marzo, 11:00 am Diezmo 4

  10. In summary • Project preparation and structuring may not be a source of funds, but can help bring funds and enhance the long term sustainability of water projects • All actors, all sources, all structures must be explored

  11. Removing financing obstacles through project structuring Access to Finance for Local Governments IV World Water Forum March 17, 2006 Antonio Vives Manager, a.i. Sustainable Development Department Inter-American Development Bank

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