In a paper now published by Fonds mondial pour le développement des villes (FMDV) entitled “What the world needs now… is local infrastructure investments – Challenges and solutions with a focus on finance” I outline how economic growth can be supported after the financial crisis. Faced with immense challenges such as rapid urbanisation and climate change, local authorities worldwide must be given the tools to support investments in local infrastructure. These investments need to be properly financed. Raised taxes and central government transfers are not enough and raising finance directly from banks and the international capital market can become a costly affair for many local authorities. This is the reason why it is necessary to look closer at the option of Pooled Financing Mechanisms (PFM) in which local authorities come together to jointly, and with solidarity, raise funding in a cost-effective way from the markets. These PFMs or Local Government Funding Agencies also help foster professionalism and transparency within local authorities, as well as contributing to increased local democracy. Read the full paper here.
Lars M Andersson