Transcript No Slide Title

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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
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What is the EBRD?
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
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
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12
6
0
'98 '99 '00 '01 '02 '03 '04
Cumulative commitments
€24.1 billion
Unaudited June 2004

Capital base of €20
billion
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Market Size ---Local Authorities in EE
Total local expenditure
EUR 31 billion / 8.6% of GDP
Total GDP of Mexico
EUR 816 billion
Total GDP Accession States
EUR 363 billion
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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
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EBRD financing of municipal
infrastructure
Municipal Sector Business Volume
(Cumulative figures)
1800
1600


Projects in over 120 municipalities

Over 30 million population served by
EBRD-financed municipal projects
1400
€ mm
€1.9 billion committed to €5 billion in
investment
1200

€531 million operating assets
1000

€800 million under appraisal
800

600
Trend towards non-sovereign and
private financing
– 10% Sovereign
– 20% PPP
– 70% Municipal
400
200
0
1995
1996
1997
1998
Sovereign
1999
2000
Municipal
2001
2002
PPP
Figures as of October 2003
2003
EBRD’s municipal projects have had a
successful track record since 1996
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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)
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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 BankGovernment-Local Authority --- need for a “champion of
reform”
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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
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How to contact us

Thomas Maier, Director, Municipal and
Environmental Infrastructure
Tel: +44 20 7338 7924 / fax: +44 20 7338 6964
Email: [email protected]

General enquiries
Tel: +44 20 7338 6372 / fax: +44 20 7338 6102
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www.ebrd.com