TY - JOUR
T1 - Improving local infrastructure finance in developing countries through grant-loan linkages
T2 - Ideas from Indonesia's water sector
AU - Smoke, Paul
PY - 1999
Y1 - 1999
N2 - In recent years, developing countries under fiscal pressure have increasing recognized significant weaknesses in their intergovernmental mechanisms for financing local infrastructure. Many countries are in the process of rationalizing poorly coordinated and subjectively allocated grant systems as well as loans. Such efforts, however, are typically undertaken independently of each other, often providing conflicting incentives for local fiscal behavior. I argue that the reform of grant and loan mechanisms should be explicitly linked to improve the overall effectiveness of the infrastructure finance system. The potential complications involved in designing grant-loan linkages, however, are considerable. I illustrate some key issues by examining the water sector in Indonesia, concluding with suggestions for how to think about creating such linkages in other sectors and countries.
AB - In recent years, developing countries under fiscal pressure have increasing recognized significant weaknesses in their intergovernmental mechanisms for financing local infrastructure. Many countries are in the process of rationalizing poorly coordinated and subjectively allocated grant systems as well as loans. Such efforts, however, are typically undertaken independently of each other, often providing conflicting incentives for local fiscal behavior. I argue that the reform of grant and loan mechanisms should be explicitly linked to improve the overall effectiveness of the infrastructure finance system. The potential complications involved in designing grant-loan linkages, however, are considerable. I illustrate some key issues by examining the water sector in Indonesia, concluding with suggestions for how to think about creating such linkages in other sectors and countries.
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U2 - 10.1080/01900699908525441
DO - 10.1080/01900699908525441
M3 - Article
AN - SCOPUS:85071202602
SN - 0190-0692
VL - 22
SP - 1561
EP - 1585
JO - International Journal of Public Administration
JF - International Journal of Public Administration
IS - 11-12
ER -