sanitation amounted to some 185 million USD/year (BDE, 2021). It is not known how much public finance actually went into the sector. If the public finance targets were achieved, debt would have represented up to 32% of the investment flows. -
Though this report doesn’t include the detailed case of FINDETER in Colombia, some data are available about the relative importance of water-related loans it provides. According to FINDETER (2017), it disbursed USD about USD 96 million/year over the period 2012-2017 to the sector. During the same period, investments from public finance and from tariffs amounted to an average of USD 1,243 million/year. Loans from the national PDB FINDETER thus represented almost 8% of all investment flows in the sector.
In spite of the different ways of expressing the figures (as percentage of all financial flows in the sector, or as percentage of investments), these do indicate that national PDB loans play a significant role in the financing of the sector in these countries. In Ecuador the percentage is very high, but even percentages of 8-12% in Brazil and Colombia are significant. This doesn’t mean that the significance of national PDB finance is spread evenly over the sector. The interviews indicate that national PDB finance is mainly concentrated among the middle-sized utilities. Larger utilities and local governments can typically access finance from commercial banks or even directly from IFIs. Their size and expertise means that they have the capacity to take on such loans and prepare project proposals. The smallest local governments and utilities, or providers in rural areas, often are not credit-worthy. Hard figures are lacking but the interviewees indicate that most of their loans are focused on the middle-sized utilities who have some capacity to take on debt, have some capacity to prepare finance proposals, but don’t have the creditworthiness to access commercial finance. The significance of PDB finance thus lies in being able to cater for that segment of the sector. 2.3. Financial and technical products and services provided by the PDBs in the water sector In order to execute that mission, the PDBs provide a range of financial and technical services, including financial products with sovereign guarantee from the national government and with no sovereign guarantee. The following ones were identified across the case studies. •
Direct credit lines and loans for infrastructure investments
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Project finance
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Loans and grants for performance improvement of utilities and local governments
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Channelling grants
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Technical support in structuring finance, and establishing co-finance mechanisms
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Technical support for project preparation of loans and PPPs
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Administrating trust funds
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Sector studies and research
Below we elaborate each of these in more detail. 2.3.1.
Direct credit lines and loans for infrastructure investments
The provision of such loans for water-related investments is the core financial product that all PDBs provide, including loans with sovereign guarantee from the national government and with no sovereign guarantee. As indicated, this is done in a demand-based manner, whereby a prospective
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