Credit enhancement for Infrastructure Financing in Pakistan

Size: px
Start display at page:

Download "Credit enhancement for Infrastructure Financing in Pakistan"

Transcription

1 June2008 Credit enhancement for Infrastructure Financing in Pakistan Dr. Muhammad Saleem, Joint Director State Bank of Pakistan [June 2008]

2 CREDIT ENHANCEMENT FOR INFRASTRUCTURE FINANCING Credit enhancement encompasses a variety of provisions that may be used to reduce the credit risk of an obligation. Credit enhancements are often incorporated into derivatives, corporate debt, securitized debt and other instruments. Techniques of credit enhancement vary depending how much secondary market is developed, economic situation and level of credit volume in a country. Credit enhancement has emerged over the past decade as a critical factor in the development of credit markets in developing and transitional countries. Credit enhancement is especially crucial in the development of market-based systems as distinct from government run systems since private lending institutions have had relatively little experience with financing government investments in the developing world. Credit enhancement strategies are designed to mitigate the risks associated with lending and therefore foster the growth of the overall credit system. These programs help governments to develop experience in managing debt, and encourage the private sector to lend to public and private entities, either directly or through market intermediaries. The movement toward credit enhancement is viewed by a growing number of public finance economists as a necessary step in developing domestic market-based systems of credit. Earlier attempts to develop these systems in developing and transitional economies have been largely unsuccessful, in part because emphasis was placed on subsidizing credit rather than building market-based systems. Indeed, it has been argued for some time that subsidized (and directed) credit has created disincentives for developing market-based systems. When designed and implemented properly, credit enhancement strategies can mobilize and leverage resources, as well as support local debt market development. They can also be very cost-effective: since the enhancements themselves do not substitute for the provision of the credit mainly mitigate risk they can increase flows of capital considerably, given a small outlay of funds. Enhancement strategies are also adaptable and designed to target specific risks as perceived by investors. They can be applied to debt for specific sectoral uses or made available for only certain classes of borrowers. At the core of credit enhancement is the concept of the pledge for repayment. Governments can pledge either physical asset as collateral and/or future revenue streams. 2

3 In the early stages of credit market development there was a strong impetus for financial institutions to require a pledge of physical assets especially if the revenue generating authority of the borrower is not well established. This approach is fraught with a number of pitfalls and opportunities for corruption which has led to the development of credit enhancement strategies that focus on the pledging of future revenue streams. This discussion paper introduces the concept of credit risk and the importance of creditworthiness for governments. It then describes the most common types of credit enhancement programs, and analyzes several examples of successful initiatives. This paper also discusses the demand for infrastructure investment in Pakistan. Infrastructure Project Financing in Pakistan Infrastructure development and economic growth Infrastructure development is essential for continued economic growth and prerequisite to attract foreign investment in the economy. Infrastructure development was traditionally financed by public funds. In the late 80 s, due to funding limitations, capacity constraints, to enhance the level of efficiencies in delivery of infrastructure projects and to spare public funds for social development like health and education, the governments reduced public investment in infrastructure development and encouraged the private participation. As a result of innovative approaches to financing infrastructure services and schemes, Public Private Partnerships (PPPs) has been endorsed by many countries as means of accelerating delivery of such services. In Europe alone, the value of PPP project financing has exceeded 115 billion dollars. 1 According to World Bank s World Development Report (1994), the adequacy of infrastructure helps to determine one country's success and another's failure, in diversifying production, expanding trade, coping with population growth, reducing poverty or improving environmental conditions. The report also states that 1 percent increase in the stock of infrastructure is associated with a 1 percent increase in gross domestic product (GDP) across all countries. 2 1 Euromoney Forum According to the report, although growth in investment and economic output is correlated but the effect of infrastructure on growth while keeping other factors constant has not been fully established. 3

4 Infrastructure and FDI The link between infrastructure and Foreign Direct Investment (FDI) and particularly export oriented FDI is well established. 3 Availability of good quality physical infrastructure improves the investment climate for FDI by subsidizing the cost of total investment by foreign investors and thus raising their rate of return. Surveys of prospective foreign investors over a wide range of countries show that the quality of infrastructure is an important factor in ranking potential destinations for direct investments. 4 Quality of physical infrastructure is an important consideration for Multinational National Enterprises (MNEs) in their location choices for FDI in general, and for efficiency-seeking production in particular. Infrastructure quality is also important for establishing production linkages in cases where different parts of a single product are manufactured in various countries. The need for infrastructure services evolves on an ongoing basis and existing facilities needs to be upgraded in order to accommodate growth and development in an economy. A study suggests that a 7.5% GDP growth would result in increased demand for infrastructure services that in turn would require investment in infrastructure amounting to about 5 % of GDP. 5 Weak infrastructure has been one of the major factors restricting Pakistan s economic growth and damaging its investment prospects. For example, according to an estimate by Planning Commission, inadequate power and energy supplies may force firms to generate their own power which can tie up as much as 12% of their capital. Power shortages are estimated to cost as much as 6% of the annual production. Unfortunately, Pakistan has often faced energy shortages mainly due to inadequate infrastructure and resources. Likewise, infrastructure inadequacies as well as inefficiencies in transport logistics such as roads, ports and rail transport have been costing the economy more than Rs. 150 billion every year. 6 Moreover, these have also resulted in loss of competitiveness. 3 A study by Nagesh Kumar 2001 suggests strong linkage between the status of infrastructure services and location choice for FDI by MNEs. 4 Source: World Development Report, Estimation of Infrastructure Investment Needs In The South Asia Region, Isabel Chatterton and Olga Susana Puerto 6 Estimate by Planning Commission 4

5 Thus it becomes imperative for any country and particularly an emerging economy like Pakistan to invest heavily in infrastructure. In recent times, Pakistan has witnessed high growth rates of above 6%. In order to sustain such growth rates, infrastructure has to be improved. Infrastructure development and PPP in Pakistan The improvement and expansion of infrastructure is a pre-requisite for sustaining and accelerating economic growth and social development in a country. Improving quality and service coverage in power, water supply and sewerage treatment, transport and logistics are crucial for Pakistan s economy and to improve the quality of life of the people. Pakistan s infrastructure needs are massive and its resources are limited. Not only is the limited fiscal space, there are also huge gaps in public sector capacity to build and operate infrastructure. Tight fiscal indicators such as fiscal deficit, trade deficit and current account deficit does not permit to spare public sector resources for infrastructure development. As the economy is growing at the rate of 7 percent on average per annum, it requires investment on infrastructure around 7% to 9 % of GDP. This huge investment cannot be done by the public sector alone when there is already a budget deficit. Growing demand for infrastructure development needs innovative approaches, away from the traditional role of the government as the service provider and a principle investor. The government estimated that less than half of the infrastructure investment can only be covered by the public funds under the Medium Term Development Framework (MTDF). The rest of the investment can be attracted from the private sector by providing a combination of policy reforms, institutional support, incentives and financing modalities. In order to fill the investment gap for infrastructure development, the best available option is public private partnership (PPP). PPP are projects involving both the public and private sectors. The involvement of each sector can be to varying degrees and the partnership can take different forms. One of the common PPPs arrangements is a contractual arrangement under which a private party agreed to finance, construct and operate a facility for an agreed period of time and transfer the facility to a government or other concerned public agency on expiry of the stipulated period. 5

6 The difference between PPP and privatization is that privatization takes over a publicly owned entity while in PPPs, both private and public sector share risks and benefits. For the public sector, the main incentive is that the private sector share funds and risks with the public sector. Since the private sector is considered more efficient than the state in running entities and is also likely to charge actual costs of services from customers, the burden of subsidies can be minimized and that the public funds can be freed for other social economic projects to improve the socio economic conditions in the country. PPP can bring new technology and provide a better allocation of resources with less fiscal burden on the government. In Pakistan, PPP is a viable option with a great potential which by combining skills, expertise and other resources from different entities can help to achieve outcomes that are unattainable by independent action. Recently, public and private sectors are realizing about the significance of such partnership. The reason for such partnership is that the government is facing scarcity of public funds to finance the infrastructure projects. Other elements include efficiency improvements, reforms and modernization of public services. In order to have successful PPPs, Pakistan needs: Commitment and participation at the highest levels within the government; A conducive policy framework; An institutional setup containing expertise to coordinate and promote PPP activities; A policy on targeted subsidies; and Availability of long term fixed rate financing in local currency. Local currency is an important part of sustainable private sector investment. Moreover, the availability of local currency financing is a key for sectors that underpin development, infrastructure, housing and smaller business. But while local currency is in itself an important development objective, the mechanism through which the local currency provided is no less important. There are several approaches used for local currency financing. The most widely used approach especially in developing countries like Ghana, Nigeria and India is a market based approach. This approach includes the use of local swap markets and structured finance solutions to help clients to access local banks and capital markets funding. The use of market based approach is important 6

7 because they promote the development of local capital markets that in the long run, enables a developing economy to finance itself. One of the advantages of local currency financing is that it can reduce financial vulnerability to external shocks, particularly currency shocks, decrease financing costs as consequences of an improved country s risk profile. It ensures domestic financial deepening and capital market development. Past experience with IPPs also supports the case for local currency financing. As a result of 1994 power policy, WAPDA had huge financial liabilities because of problems with foreign currency indexation, devaluation of local currency and payment in dollars. Another problem was that in the power sector, foreign currency was a major source of funding. As a result of all these problems of foreign currency, the WAPDA was on the edge of financially collapse due to huge financial liabilities. This problem still exists and needs not to repeat for new projects in future. Presently Pakistan has a budget deficit of Rs. 398 billion which is targeted to be 4.7 per cent in Therefore, exclusive reliance on foreign currency may not be the best option. In conclusion, Pakistan needs infrastructure development to maintain ongoing high economic growth. This infrastructure development cannot be achieved without private sector partnership as the public sector is facing shortage of funds; lack of capacity to build and operate projects. The only available viable option is PPP with local currency financing. This will increase private investment and will also reduce financial burden on the government. It will ensure domestic financial deepening and capital market development as well. Investment required for infrastructure Realizing the importance of infrastructure for economic development, increase in industrial and export competitiveness, and improvement in industrial climate, Pakistan intends to invest heavily in all the sub components of infrastructure such as roads, railways, ports, aviation, energy resources, water reservoirs etc. Major emphasis has been given to infrastructure development in the Medium Term Development Framework ( ). The table below shows the amount allocated under MTDF for the development of physical infrastructure. 7

8 Physical Infrastructure and Financing requirement by 2010 Total Roads Railways Ports Aviation Power Fuel Water and Sanitation Total Requirement Physical infrastructure Rs 2,338 billion (Approx US $ 39 billion 7 ) Rs.248 billion (US $ 4.13 billion) Rs billion (US $ 1 billion) Rs. 117 billion (US $ 1.95 billion) Rs.142 billion (US $ 2.36 billion) Rs 1,102 billion (US $ billion) Rs billion (US $ 6.6 billion) Rs 276 billion (US $ 4.6 billion) Source: MTDF (2005) Budgetary Allocation Rs 1,368 billion (US $ 22.8 billion) Rs.217 billion (US $ 3.61 billion) Rs billion (US $ 1 billion) Rs. 13 billion (US $ 0.21 billion) Rs billion (US $ 0.15 billion) Rs 575 billion (US $ 9.6 billion) Rs billion (US $ 3.65 billion) Rs 276 billion (US $ 4.6 billion) Non Budgetary(Private Public Partnership / Private Sector/Self Financing Rs 970 billion (Approx US $ 16.2 billion) Rs.31 billion (US $ 0.51 billion) Rs 104 billion (US $ 1.73 billion) Rs billion (US $ 2.23 billion) Rs 445 billion + 81 billion (KESC) (US $ 8.76 billion) Rs billion (US $ 2.90 billion) Around Rs 2,338 billion (approximately US $ 39 billion) have been envisaged under the MTDF for physical projects falling under the major groups and out of which Rs 1,368 billion will be provided from the government budget whereas the rest (around Rs 970 billion will be from non budgetary sources such as Private/Public partnerships, self financing from the corporations, private sector etc. A substantial portion of non budgetary allocation would have to be raised from additional domestic and foreign sources such as bank loans, capital markets etc. High reliance on the non budgetary sources (private sector, self finance and private public partnership) and modes of raising finance, such as banking sector and capital markets, is hardly surprising given the enormous infrastructure demands and public sector constraints to meet all of these requirements. MTDF only contains plans and amounts for the period In the longer run, much more would be required for infrastructure development and moreover an increasing 7 Exchange rate of Rs 60/US dollar has been assumed for the purpose of conversion of rupees into dollars. All figures in US dollars are therefore approximate figures. 8

9 portion will be non budgetary. For example, in the power sector alone, the additional power generation requirement will be around 143,310 MW during , and to meet this requirement an investment of $ 150 billion would be required. The average Government investment per year is planned at $ 2.0 billion, with balance requirement of $ 4 billion per year met through private sector including BOT (Build Operate and Transfer) and private-public partnership modes. Owing to high envisaged future investment in infrastructure from non budgetary sources, additional modes of infrastructure financing have to be properly explored and where needed reforms and amendments need to be undertaken to remove any bottlenecks. The Annex-I shows the present status of infrastructure in Pakistan, the major problems, plans for capacity enhancement and improvement in infrastructure under MTDF and the amounts allocated for infrastructure financing for the period The financing requirements are only rough estimates intended to give an idea about the magnitude of investment required in infrastructure over the period covered under MTDF. Some details of sector wise present status of infrastructure in Pakistan are discussed below. Energy and Power The current state of infrastructure in Pakistan is inadequate and will not be able to sustain high growth rates and if not improved, would also curtail investment. According to the survey results of World Development Indicators 2006, 39% of the top executives consider electricity problems as the major constraint towards growth in investment in Pakistan. In fact electricity was placed almost at par with indicators such as political uncertainty. These results reveal how crucial energy is for stimulating investment in country. Likewise, according to an estimate by Planning Commission, inadequate powers and energy supplies may force the firms to generate their own power which can tie up as much as 12% of their capital. Power shortages are estimated to cost as much as 6% of the annual production. Moreover the power shortages are hurting the export competitiveness of the Pakistani textile sector due to higher costs and delays in production which becomes costly due to time bound nature of the international orders. As per MTDF, Pakistan needs to add around 8,000 MW of capacity which would require at least US $ 18 billion of investment and a significant part, around US $ 9 billion, has to 9

10 come from non budgetary sources. However, the progress so far has been rather slow and by all accounts we are going to fall short of this target. The longer term requirements are much higher. By 2030 additional capacity of 143,310 MW is planned which in turn would require investment of around US $150 billion. The average Government investment per year is planned at $ 2.0 billion, with balance requirement of $ 4 billion per year met through private sector including BOT (Build Operate and Transfer) and privatepublic partnership modes. Future expansion plans and envisaged energy mix Presently the energy mix for Pakistan suggests that it is primarily a gas dependent country. However, mode of electricity generation is largely thermal based on oil and gas. Sources of Energy Present Vision 2030 Primary Energy Supply Installed Capacity Power Generation Envisaged Primary Energy Supply-2030 Envisaged Capacity Power Generation 2030 for in MTOE Share % MW Share % MTOE Share % MW Share % Gas , , Coal , Hydro , , Nuclear ,800 5 Oil , ,760 5 Renewable , , MTDF (2005) Planning Commission Pakistan has realized that it also needs to change its energy mix and develop potential for hydel, coal based and nuclear power generation. Pakistan has an estimated 46,000 MW of total hydel potential but current utilization is merely 6,500 MW. Moreover, the IPPs attracted through Power Policy of 1994 tilted the hydel-thermal ratio towards thermal which has become too expensive as oil prices have shot up in the international market. Moreover, oil based production is also a 10

11 significant drag on the foreign exchange particularly in the times of rising trade deficits. However, Pakistan has realized the problems and its future energy policy is consequently forward looking and takes into account all the factors. A major emphasis would be on changing the energy mix by shifting the emphasis from oil based production to other sources such as Hydel, Coal based, Gas based, nuclear and renewable energy sources. In the future energy mix, gas will continue to play a dominant role. In this regard Pakistan would pursue a policy aiming at a combination of exploration and import from neighboring countries. Drilling activities would be enhanced by removing impediments in the policy. The pace of exploration and development wells will be increased to drill 100 wells per year during the next few years, with further increases to 150/200 wells per year from 2010 to More concession areas would be awarded to companies for oil and gas exploration having good track record. Pakistan s government is working on plans to build a pipeline that spans from Iran s massive natural gas reserves to Indian markets across Pakistani territory. In August 2006, Iran and Pakistan extended a previously signed (April 2005) memorandum of understanding (MoU) until One of the main concerns for both Pakistan and India is how much Iran will charge for the natural gas. To help mediate the pricing issue, the three countries appointed an international consultant this past summer. Iran has offered to cover 60 percent of the construction costs of the pipeline and Pakistani officials have stressed their ability to safeguard the pipeline. Pakistan could earn about $70 million annually in transit fees from the pipeline. If India decides to forego its part in the pipeline project, Pakistan and Iran have agreed to work on a bilateral Iran-Pakistan pipeline project. A second natural gas import possibility that has been considered is an eventual link to the Dolphin Project in Qatar. This plan would supply natural gas from Qatar's North Dome field to Pakistan via a sub sea pipeline from Oman. Even though Pakistan has signed a preliminary agreement to eventually purchase natural gas from Qatar, it remains to be seen if further action on the project will be taken. A third natural 11

12 gas pipeline option that has been discussed is a line from Turkmenistan to Pakistan via Afghanistan. However, Pakistan faces various hurdles with this option, which include the security situation in Afghanistan and the price Turkmenistan would charge for the natural gas. A major thrust of the future plans regarding energy security is to enhance hydel capacity. Hydel power is relatively cheaper compared to thermal and moreover is not dependent on imported inputs. Pakistan has an estimated 46,000 MW of total hydel potential but current utilization is merely 6,500 MW. Realizing the importance of hydel power, Pakistan will add to its hydel capacity through construction of dams. Feasibility and detailed engineering work on major hydropower projects is already underway and their construction would be initiated during the next few years. By 2010, in power generation a total of 23 hydel projects are planned to be initiated out of which 14 hydel projects will be completed. Recently, Government has also announced its policy Water Vision 2016, which envisages initiation of construction of the Kalabagh, Basha,Akori, Munda and Kuram Tangi dams by the year 2016.The construction of Basha dam has already been started. Basha dam, after completion will add approximately 4,500 MW of hydel power. Similarly, Mangla Dam is being raised and additional energy would also become available after the project is completed. In the long run ( ) government plans to increase hydel capacity to 32,660 MW Roads Likewise, the inadequate road infrastructure is costing the economy more than US $ 2 billion annually. Presently, the road transport can at times take 4-6 days between ports and north country which is twice the equivalent time in Europe / East Asia, and there are delays in connectivity which are causing inefficiencies and losses to the economy. Highway modernization is underway and will save Pakistan economy more than Rs 100 billion annually 8. It would lower 25% transport costs as large road freight share is presently costing economy Rs billion per annum in extra fuel cost and subsidies on diesel. In addition, it would also save Rs.30 billion per annum which at present is being incurred as road user 8 Dr Asad Shah, Advisor Planning commission in his address to Pakistan Development Forum. 12

13 costs and Rs. 25 billion per annum which is the contribution to the infrastructure deficit. It would also lead to reduction of 50% in fatal accidents. Moreover, under recently formulated National Trade Corridor Program, road linkages with the neighboring countries have been envisaged. The potential benefit of establishing linkages with Iran, India and central Asian states through Afghanistan are enormous. Cross border infrastructure connectivity would promote regional integration, reduce cost of transportation and establish supply chain linkages. For the land locked Central Asian States, such linkages, if established would provide faster access to sea. By 2010, Pakistan needs to construct/improve more than 20,000 km of roads. Likewise significant improvements are also needed in port infrastructure and fuel sector. Financing Infrastructure As already mentioned, Pakistan needs huge amount of investment in infrastructure development in future. A substantial portion of non-budgetary allocation would have to be raised from additional domestic and foreign sources such as bank loans, capital markets etc. High reliance on the non-budgetary sources (private sector, self finance and private public partnership) and modes of raising finance, such as banking sector and capital markets, is hardly surprising given the enormous infrastructure demands and public sector constraints to meet all of these requirements. Financing infrastructure would require development of credit enhancement mechanisms and effective and increased utilization of both banking and non banking sources. Non-banking sources such as bond market need to be developed and Pakistan would also need to establish specialized institutions in housing finance, the infrastructure development and other finance facilities which can also lend on long term. In this regard, Pakistan has already taken some important steps. First of all, in order to facilitate private investment, the Ministry of Finance, Government of Pakistan, established the Infrastructure Project Development Facility (IPDF) in May 2006 to facilitate the preparation and closure of PPPs transactions between public sponsors and private investors and to determine and meet the funding gap 13

14 for making transactions viable, while minimizing the cost for the public through competitive bidding. IPDF will provide expertise and hands on support to Implementing Agencies (line ministries, provincial Governments, local bodies, and state owned enterprises) in improving their PPP proposals, preparing them for tendering, and supervising the bidding process without becoming a contract signatory to a transaction. Moreover, government has also created Infrastructure Project Finance Facility (IPFF) to supplement the efforts of IPDF. The IPFF, which would be a non-bank Financial Institution (NBFI), would focus on the mobilization of private capital resources from local financial markets (and from cross-border financial markets in some circumstances) for infrastructure development. IPFF could play a catalytic role as an instrument supporting the creation of a corporate infrastructure finance bonds. At present the tenor of domestic currency financing is short relative to the needs of private infrastructure projects. What are Pakistan's infrastructure total requirements and how does it plan to finance? Pakistan s physical infrastructure requirements envisaged under the Medium Term Development Framework ( ) are as under: Water Sector: The water demand both for irrigation and non-irrigation by the year was estimated at Million Acre Feet (MAF) as compared to present demand of MAF. The water availability at the beginning of MTDF term was MAF (including groundwater) which is expected to increase to MAF by year Under the MTDF, an extensive program for the development of water resources in the sub-sectors of irrigation, drainage and reclamation, on-farm water management, flood control and research has been prepared. Despite sustained government efforts to improve water availability through the development of additional medium and large-size reservoirs, integrated resource use, the introduction of water efficient techniques, containment of environmental 14

15 degradation, institutional strengthening, capacity building and human resource development, there will be a gap of MAF by the year Financing: Under the Public Sector Development Program, an allocation of Rs billions was proposed for water sector including Rs. 218 billion Federal allocation (Rs billion for irrigation, Rs billion for drainage & reclamation, Rs billion for flood control program, R billion for onfarm water management program, and Rs billion for research) and Rs billion Provincial allocation. Energy Sector: The energy demand over the next few years is expected to grow at a rate of 7.4 percent per annum till In FY05, the installed capacity of the power sector was 20,289 MW, while electricity generation stood at 87,992 Gwh. During , 1.7 million new consumers were added in the WAPDA and KESC system. The power demand is projected to increase from 15,500 MW in 2005 to 21,500 MW in 2010 and energy generation is planned to increase to an average annual compound rate of 7.9 % to reach 128,670 Gwh; In order to meet the load requirement during , an additional 8000 MW of capacity was projected to be required during that period. About 3 million new customers will be added to the distribution network during the MTDF period. Reduction in power losses through energy loss reduction, load management and distribution rehabilitation program. Financing: Total investment for power sector during MTDF period was estimated at Rs. 1,102 billion (including Rs. 445 billion in the private sector). Similarly, a total investment of Rs billion was envisaged under MTDF, including a public sector investment of Rs billion. Infrastructure project financing by private sector in Pakistan For a variety of reasons ranging form regulatory outlook to the government policies, commercial banks limited capacity to handle PPP projects, political and macro economic instability, infrastructure financing in Pakistan has not been able to grow as much as 15

16 needed. So far Pakistan has had only limited success in attracting private investment in the infrastructure projects, which has remained limited to only highly marketable commercial undertakings such as power generation, oil pipelines, LPG extraction and marketing, cellular telephone networks, container terminals at ports. In this connection, it is important to note that unlike many other developing countries of Latin America and Far East Asia, Pakistan had not been able to reap benefits from the first wave of private sector participation in infrastructure projects. Reforms and steps taken to remove constraints for infrastructure financing Macroeconomic stability, continuity and consistency of policies have been increased in the country. Corporate governance has improved during last few years and level playing field is affordable to all potential and existing investors. Transparency in award of contracts and privatization transactions has become the hallmark in recent years. Policy making and operations have been separated in case of oil and gas and power sectors. Independent regulatory authorities such as NEPRA, PTA and SECP have been established to provide the supportive regulatory framework and market based price determination. Experience from the Private Sector Energy Development Fund has provided insights as how to avoid mistakes in structuring finances for infrastructure. A yield curve and benchmark for years financing have been developed by introducing PIBs of the same tenor. Contractual savings in the form of Provident Fund, Pension Funds are available in large amounts for investment in long term instruments. Foreign exchange availability is no longer a major stumbling block in converting rupee financing for acquisition of imported machinery and equipment. Cost of doing business is declining due to successful reforms and economic policies Since 2000, Pakistan s credit worthiness has been upgraded by the international agencies such as Standard & Poor s (S&P) and Moody s Investors Service. 16

17 Improvement in Pakistan s economic performance has been duly acknowledged by both Moody s and S&P as they have upgraded Pakistan s ratings. Another report by World Bank entitled, Doing Business in South Asia 2007 ranks; Pakistan at 74th among 175 top ranked economies in the world. The top-ranked countries in South Asia Region are Maldives (53) and Pakistan (74), followed by Bangladesh (88), Sri Lanka (89), Nepal (100), India (134), Bhutan (138), and Afghanistan (162). All this support the idea of joint venture infrastructure funds between international private fund managers and Pakistani financial institutions. Infrastructure Financing Facility: The government has established Infrastructure Project Financing Facility (IPFF) and Infrastructure Project Development Facility (IPDF) to facilitate in infrastructure project development and infrastructure project financing. Policy and Financial Impediments that need to be removed Pakistan in order to undertake the infrastructure development, particularly through public private partnership and private sector mode, has to review various policies, and to remove legal and financial impediments. On the policy side, in power where the need is much more urgent and pressing, several policy impediments such as inefficient tariff structure, cumbersome regulatory framework and slow processing of proposals have to be rectified. On the transport side, we need to bring clarity in the policy, improve the design of concession agreements, introduce better framework of government / minimum revenue guarantees and improve the coordination between federal and provincial domains in order to avoid conflicts. We also need to improve toll collection mechanism. However, the most pressing challenge is on the financing of infrastructure projects in local currency. While the past experience has shown that given the right incentive, foreign investment can be brought in, in contrast the rupee financing has been much harder to come by. The importance of rupee financing has assumed supreme importance due to the increasing trade and current account deficit. For that purpose financial deepening as well as diversification of financial sector is necessary. Given the peculiar nature of risk return profile of infrastructure projects, long term rupee financing is 17

18 needed. Today, this task is particularly difficult in Pakistan which has low financial depth and is overly dominated by banking sector which presently has much larger proportion of short term deposits. In fact, international comparison would reveal that Pakistan is rather a unique case where current and short term/demand deposits form the major portion of the liabilities of the banking sector. In order to fulfill the huge financing needs of the infrastructure, we need to have longer term deposit structure and appropriate long term financing facilities for the commercial banks to undertake infrastructure projects. We also need specialized infrastructure financing and development institutions on the pattern of Findeter (Columbia), IL&FS (India), Inca (South Africa) which provide credit enhancement as well as other direct and indirect financing solutions. Pakistan has already taken some important steps. First of all, in order to facilitate private investment, the Ministry of Finance, established the Infrastructure Project Development Facility (IPDF) in May 2006 to facilitate the preparation and closure of PPP transactions between public sponsors and private investors and to determine the funding gap for public funding for making transactions viable. The said initiative will be supplemented through creation of Infrastructure Project Finance Facility (IPFF). The IPFF, which would be a non-bank Financial Institution (NBFI), and would focus on the mobilization of private capital resources from local financial markets (and from cross-border financial markets in some circumstances) for infrastructure development. However, given the magnitude of the infrastructure demand, we may need to create more institutions. Other than the banking sector, which as already pointed out has some constraints, debt market has to be kick started and infrastructure bonds and other similar instruments need to be launched. We need major debt market reforms, which should be accompanied by pension and insurance sector reforms to ensure that there is a market for such instruments. Government at least initially has to play a major role in introducing legal changes, provide support and market making. One of the major areas that are affected by lack of financial depth and diversification is development of infrastructure where the investment requirements are huge. In power sector alone investment of at least US $ 18 billion ( around US $ 9 billion from private 18

19 sector) in the medium run and around US $150 billion in the longer run is required. In roads, ports and other transport logistics, additions and up gradations of around US $ 10 billion is required in the medium run and much more in the longer run. Due to lack of financial depth and diversification, the financing of infrastructure projects in local currency has become particularly difficult which has assumed supreme importance due to the increasing trade and current account deficit. Financing infrastructure has been made more difficult as in Pakistan the financial sector, besides being low in depth, is overly dominated by banking sector characterized by larger proportion of short term deposits. Types of Credit Enhancement Structures Credit enhancement mechanisms are designed to address risks associated with debt obligations. Credit enhancement designs are dependent on the status of domestic financial markets and degree of sophistication at local banks and institutional investors. As the secondary market in Pakistan is not well developed, therefore, some of the credit enhancement instruments may not be used commonly. However, this section provides the most common examples of such structures that are used today, such as different types of guarantees (comprehensive and partial credit), co-financing and subordination, bond banks and pooling. In each case, corporate sponsorship varies, and ranges from government agency or government-owned entity, to public-private mixture entity, to private capital funds. 9 Comprehensive Guarantees These are the most common form of direct credit enhancement for debt providers. The simplest form is the comprehensive or full credit guarantee, which covers principal and interest payment regardless of the cause of debt service default. Partial Credit Guarantees An alternative guarantee approach is the partial guarantee, whereby the guarantor shares the risk of debt service default with the lenders on some predetermined basis. The idea is 9 For a more detailed overview of some of the credit enhancement structures referenced here please refer to Kehew, R., Matsukawa, T., and Petersen, J. Local Financing for Sub-Sovereign Infrastructure in Developing Countries: Case Studies of Innovative Domestic Credit Enhancement Entities and Techniques. World Bank

20 that there will be risk sharing between the lender and the guarantor that effectively mitigates borrower risk to the level absorbable by the lender. There are two types of partial guarantees partial credit guarantees and partial risk guarantees. Partial credit guarantees are guarantees where the guarantor covers a portion of debt service payments (regardless the cause of debt service default). Partial risk guarantees are guarantees where the sharing of borrower default risk is based on the cause of such default. One advantage of the partial guarantee approach compared with a comprehensive guarantee is that, with its own capital on the line, the partially guaranteed lender will examine much more carefully the credit of the borrower or the viability of the underlying transaction. This would not only help ensure that capital is allocated efficiently, but would also encourage domestic financial institutions to become more familiar with the workings of governments and their entities. Co-Financing and Subordination Debt subordination has been used in larger international or corporate transactions and to a limited extent in the area of sub-national lending. In this case, the subordinated lender acts as the credit enhancer, taking a junior lien against senior lenders. Subordination can be used in the debt structure of a sub-sovereign borrower, or of a financial intermediary. Bond Banks and Pooling In developing country sub-national borrowing, many of the individual loans are relatively small in many cases too small to be of interest to the private capital markets that are oriented to larger commercial borrowers. This situation often commends the pooling of small credits into a larger, more efficient grouping. In addition to achieving the same economies of scale that are possible with larger issuances of bonds, this technique offers a reduction in risk through portfolio diversification. Ultimately, this pooling results in reductions in the cost of borrowing to the local borrowers. The bond bank bundles the underlying national debt and then sells its bonds to investors in the capital markets. The basic idea behind the pooling concept is to develop a portfolio of loans that can then be remarketed in bulk to the securities markets as bond bank obligations. Bond bank obligations almost always carry with them a variety of enhancements, such as reserves, various intercept provisions and perhaps bond insurance. 20

TRANSPORT SECTOR ROADMAP AND THE INVESTMENT PROGRAM I. Roadmap

TRANSPORT SECTOR ROADMAP AND THE INVESTMENT PROGRAM I. Roadmap TRANSPORT SECTOR ROADMAP AND THE INVESTMENT PROGRAM I. Roadmap 1. Launched in 2008, the government s Afghanistan National Strategy (ANDS) is a Millennium Goals (MDGs) based action plan and road map for

More information

GOVERNMENT OF PAKISTAN MINISTRY OF PORTS AND SHIPPING

GOVERNMENT OF PAKISTAN MINISTRY OF PORTS AND SHIPPING GOVERNMENT OF PAKISTAN MINISTRY OF PORTS AND SHIPPING Mission Statement As more than 95 per cent of the total freight trade of Pakistan is seaborne, the overall objective of the Ministry of Ports and Shipping

More information

Comparison of Electricity Supply and Tariff Rates in South Asian Countries

Comparison of Electricity Supply and Tariff Rates in South Asian Countries Comparison of Electricity Supply and Tariff Rates in South Asian Countries By Faisal Jamil, Energy Specialist (Economics) Introduction A reliable, accessible and affordable supply of energy produced in

More information

PPP Basics and Principles of a PPP Framework

PPP Basics and Principles of a PPP Framework Note 1 May 2012 PPP Basics and Principles of a PPP Framework This note is the first in a series of notes on developing a comprehensive policy, legal, and institution framework for public-private partnership

More information

SECTOR ASSESSMENT (SUMMARY): FINANCE 1. 1. Sector Performance, Problems, and Opportunities

SECTOR ASSESSMENT (SUMMARY): FINANCE 1. 1. Sector Performance, Problems, and Opportunities Country Partnership Strategy: Bangladesh, 2011 2015 SECTOR ASSESSMENT (SUMMARY): FINANCE 1 Sector Road Map 1. Sector Performance, Problems, and Opportunities 1. The finance sector in Bangladesh is diverse,

More information

Infrastructure Development Funding and Financing

Infrastructure Development Funding and Financing Infrastructure Development Funding and Financing 09 December 2013 2 Presentation outline 1. Role of infrastructure development 2. Public sector infrastructure investment 3. Funding options i. Recent airport

More information

SECTOR ASSESSMENT (SUMMARY): ENERGY 1. 1. Sector Performance, Problems, and Opportunities

SECTOR ASSESSMENT (SUMMARY): ENERGY 1. 1. Sector Performance, Problems, and Opportunities Country Partnership Strategy: Bangladesh, 2011 SECTOR ASSESSMENT (SUMMARY): ENERGY 1 Sector Road Map 1. Sector Performance, Problems, and Opportunities 1. Power generation gap. Bangladesh endures long

More information

Risk Management. Risk Identification

Risk Management. Risk Identification Management This part provides guidance on the treatment of risks on a PPP project, and; Identifies the major risks common to many PPP projects across all sectors; Allocates the identified risks between

More information

Infrastructure in Colombia Key investment considerations. June 18, 2014

Infrastructure in Colombia Key investment considerations. June 18, 2014 Infrastructure in Colombia Key investment considerations June 18, 2014 With you today Stephen Best Stephane Villeneuve Senior Manager Global Infrastructure KPMG General Manager New Markets and Strategy

More information

Agreements, bonds and guarantees

Agreements, bonds and guarantees Agreements, bonds and guarantees SPV Formation The Special Project Vehicle (SPV) may take a variety of forms, including a corporation, limited liability company, general partnership, limited partnership,

More information

Dear Global Trade Matters Members,

Dear Global Trade Matters Members, Dear Global Trade Matters Members, Global Trade Matters Egypt s leading private sector think thank for Economic and Political reform is proud to announce its 2015 Calendar of Events and Special Initiatives.

More information

Thailand s Logistics

Thailand s Logistics Thailand s Logistics Over the past fourteen years, overall international trade with Thailand has grown 340% and manufacturing trade 370%; this growth, aided in part by the nation s bilateral trade agreements

More information

BUSINESS FINANCING IN TANZANIA (CHALLENGES & OPPORTUNITIES)

BUSINESS FINANCING IN TANZANIA (CHALLENGES & OPPORTUNITIES) BUSINESS FINANCING IN TANZANIA (CHALLENGES & OPPORTUNITIES) 1 The Agenda Why long term financing? The current status and existing alternatives Challenges of raising long term capital in Tanzania Capital

More information

SUMMARY PROGRAM IMPACT ASSESSMENT

SUMMARY PROGRAM IMPACT ASSESSMENT Third Financial Sector Program, Subprogram 2 (RRP VIE 37577) SUMMARY PROGRAM IMPACT ASSESSMENT I. Introduction 1. This program impact analysis (PIA) documents the formulation of the Financial Sector Program

More information

Mediterranean Guarantees

Mediterranean Guarantees A newsletter on risk mitigation instruments for infrastructure investment in the Mediterranean Issue 2, October 2013 The Investment Security in the Mediterranean (ISMED) Support Programme seeks to increase

More information

Infrastructure and Project Financing Asia Pacific Scenario. Ajay Sagar

Infrastructure and Project Financing Asia Pacific Scenario. Ajay Sagar Infrastructure and Project Financing Asia Pacific Scenario by Ajay Sagar This article was originally published in the June 2006 Global Infrastructure Report of Project Finance International Magazine The

More information

Investment Brief for the Electricity Sector in Ghana

Investment Brief for the Electricity Sector in Ghana Investment Brief for the Electricity Sector in Ghana Overview Ghana s economy growth decelerated sharply to an estimated 4.2% in 2014, down from 7.4 % in 2013. Manufacturing and oil production from the

More information

SECTOR ASSESSMENT (SUMMARY): ENERGY 1

SECTOR ASSESSMENT (SUMMARY): ENERGY 1 Country Partnership Strategy: Kazakhstan 2012 2016 SECTOR ASSESSMENT (SUMMARY): ENERGY 1 Sector Road Map 1. Sector Performance, Problems, and Opportunities 1. Overview. Oil accounts for about a quarter

More information

China Railways Development, Financing and Challenges

China Railways Development, Financing and Challenges China Railways Development, Financing and Challenges Zhang, Jianping Depart. of Development & Planning Ministry of Railway, P. R. China March 31, 2006 Transport Forum, World Bank 1. Current Situation of

More information

SECTOR ASSESSMENT (SUMMARY): TRANSPORT, and INFORMATION AND COMMUNICATION TECHNOLOGY (ROAD TRANSPORT SUBSECTOR) 1

SECTOR ASSESSMENT (SUMMARY): TRANSPORT, and INFORMATION AND COMMUNICATION TECHNOLOGY (ROAD TRANSPORT SUBSECTOR) 1 Country Partnership Strategy: Kazakhstan 2012 2016 SECTOR ASSESSMENT (SUMMARY): TRANSPORT, and INFORMATION AND COMMUNICATION TECHNOLOGY (ROAD TRANSPORT SUBSECTOR) 1 1. Sector Performance, Problems, and

More information

Mexico Shipments Made Simple. Third-party logistics providers help streamline the U.S. Mexico cross-border process WHITE PAPER

Mexico Shipments Made Simple. Third-party logistics providers help streamline the U.S. Mexico cross-border process WHITE PAPER Mexico Shipments Made Simple Third-party logistics providers help streamline the U.S. Mexico cross-border process WHITE PAPER Introduction With the cost of manufacturing rising in Asia, many companies

More information

Debt Management in Pakistan. Samina Shabir

Debt Management in Pakistan. Samina Shabir Debt Management in Pakistan Samina Shabir Introduction Why Debt Management? The current topic is important on account of fact that the growing public debt and resultant rise in debt burden is an issue

More information

Thailand focus 2014 Competencies & Growth potentials. Arkhom Termpittayapaisith

Thailand focus 2014 Competencies & Growth potentials. Arkhom Termpittayapaisith Thailand Focus 2014 What s new in Thailand s Economic Development Strategy Thailand focus 2014 Competencies & Growth potentials Arkhom Termpittayapaisith Secretary-General Office of the National Economic

More information

SECTOR ASSESSMENT (SUMMARY): PUBLIC RESOURCE MANAGEMENT. 1. Public Resource Management Sector Issues and Opportunities

SECTOR ASSESSMENT (SUMMARY): PUBLIC RESOURCE MANAGEMENT. 1. Public Resource Management Sector Issues and Opportunities Country Partnership Strategy: SRI, 2012 2016 SECTOR ASSESSMENT (SUMMARY): PUBLIC RESOURCE MANAGEMENT 1. Public Resource Management Sector Issues and Opportunities 1. The problems in Sri Lanka are multifaceted

More information

Good Practice Checklist

Good Practice Checklist Investment Governance Good Practice Checklist Governance Structure 1. Existence of critical decision-making bodies e.g. Board of Directors, Investment Committee, In-House Investment Team, External Investment

More information

Monetary policy, fiscal policy and public debt management

Monetary policy, fiscal policy and public debt management Monetary policy, fiscal policy and public debt management People s Bank of China Abstract This paper touches on the interaction between monetary policy, fiscal policy and public debt management. The first

More information

TURKISH CONTRACTING IN THE INTERNATIONAL MARKET

TURKISH CONTRACTING IN THE INTERNATIONAL MARKET Brief overview TURKISH CONTRACTING IN THE INTERNATIONAL MARKET Construction plays a crucial role in Turkey s economic development, accounting for 5.9% of GDP and employing some 1.8 million people. When

More information

Impact of Global Financial Crisis on South Asia

Impact of Global Financial Crisis on South Asia Impact of Global Financial Crisis on South Asia February 17, 2009 - The global financial crisis hit South Asia at a time when it had barely recovered from severe terms of trade shock resulting from the

More information

Electricity Demand and Supply in Myanmar

Electricity Demand and Supply in Myanmar RAJAWALI FOUNDATION INSTITUTE FOR ASIA Electricity Demand and Supply in Myanmar Prepared for Proximity Designs Myanmar This research paper was written by David Dapice (David_Dapice@harvard.edu), of the

More information

SECTOR ASSESSMENT (SUMMARY): ENERGY 1

SECTOR ASSESSMENT (SUMMARY): ENERGY 1 Country Partnership Strategy: Uzbekistan 2012 2016 SECTOR ASSESSMENT (SUMMARY): ENERGY 1 Sector Road Map 1. Sector Performance, Problems, and Opportunities 1. The energy sector underpins Uzbekistan s sustained

More information

As of July 1, 2013. Risk Management and Administration

As of July 1, 2013. Risk Management and Administration Risk Management Risk Control The ORIX Group allocates management resources by taking into account Group-wide risk preference based on management strategies and the strategy of individual business units.

More information

main type of locomotive in use, but over half of those had surpassed their durable lifespan. China Afghanistan Project Sites Nepal

main type of locomotive in use, but over half of those had surpassed their durable lifespan. China Afghanistan Project Sites Nepal Pakistan Diesel Electric Locomotives Rehabilitation Project (1) and Diesel Electric Locomotives Production Project (2) External Evaluator: Hajime Sonoda Field Survey: September 2004 1 Project Profile and

More information

Monetary and Financial Aspects of Issuing Public Debt Instruments in Kuwait (1)

Monetary and Financial Aspects of Issuing Public Debt Instruments in Kuwait (1) Monetary and Financial Aspects of Issuing Public Debt Instruments in Kuwait (1) I would like to thank the Faculty of Commerce for arranging this meeting, which I hope will lead to the clarification of

More information

Pakistan: Private Participation in Infrastructure Program

Pakistan: Private Participation in Infrastructure Program Validation Report Reference Number: PVR-300 Project Number: 36155 Loan Number: 2270 December 2013 Pakistan: Private Participation in Infrastructure Program Independent Evaluation Department ABBREVIATIONS

More information

The Role of International Financial Institutions in Financing Private Sector Development in Southeastern Europe: the Experience of BSTDB

The Role of International Financial Institutions in Financing Private Sector Development in Southeastern Europe: the Experience of BSTDB The Role of International Financial Institutions in Financing Private Sector Development in Southeastern Europe: the Experience of BSTDB Rejuvenating Growth through Private Sector Development and Foreign

More information

DAWEI Sea PROJECT Port Project DAWEI AND THE REGION

DAWEI Sea PROJECT Port Project DAWEI AND THE REGION February 2012 DAWEI Sea PROJECT Port Project DAWEI AND THE REGION PROJECT LOCATION Kunming India Middle East / Europe Dawei Africa Asia Regional Hub DAWEI Sea PROJECT Port Project DAWEI PROJECT OVERVIEW

More information

Law of Mongolia on Concessions

Law of Mongolia on Concessions Economic Policy Reform and Competitiveness Project April 2005 Ulaanbaatar, Mongolia This publication was produced for review by the United States Agency for International Development The views expressed

More information

Importance of Credit Rating

Importance of Credit Rating Importance of Credit Rating A credit rating estimates ability to repay debt. A credit rating is a formal assessment of a corporation, autonomous governments, individuals, conglomerates or even a country.

More information

India s Infrastructure - Trends, Projections, Requirements

India s Infrastructure - Trends, Projections, Requirements India s Infrastructure - Trends, Projections, Requirements Werner Heesen Consulting GmbH Werner Heesen Consulting GmbH LOGISTICS FORUM»MORE THAN CURRY« Index Key Areas A Snapshot Projections by 2020 Mega

More information

FROM BILLIONS TO TRILLIONS:

FROM BILLIONS TO TRILLIONS: FROM BILLIONS TO TRILLIONS: MDB Contributions to Financing for Development In 2015, the international community is due to agree on a new set of comprehensive and universal sustainable development goals

More information

Comparative Study of Frameworks to protect the Long Term Interests of Pension Funds Investing in Public-Private Partnerships

Comparative Study of Frameworks to protect the Long Term Interests of Pension Funds Investing in Public-Private Partnerships EMAIL contact@fosterinfrastructure.com WEB www.fosterinfrastructure.com Comparative Study of Frameworks to protect the Long Term Interests of Pension Funds Investing in Public-Private Partnerships Pty

More information

ECONOMIC ANALYSIS (Republic of the Marshall Islands: Public Sector Program)

ECONOMIC ANALYSIS (Republic of the Marshall Islands: Public Sector Program) Public Sector Program (RRP RMI 43321-1) A. Summary ECONOMIC ANALYSIS (Republic of the Marshall Islands: Public Sector Program) 1. The Republic of the Marshall Islands (RMI) gross domestic product (GDP)

More information

Infrastructure Development in India's Reforms

Infrastructure Development in India's Reforms Infrastructure Development in India's Reforms Montek S. Ahluwalia It is a privilege to contribute to this volume honouring Dr Manmohan Singh. I first met Dr Singh in 1970, when I was a very young staff

More information

Canada s Energy Sector in a Changing Global Market. Kristi Varangu Director, International Energy Division March 10, 2014

Canada s Energy Sector in a Changing Global Market. Kristi Varangu Director, International Energy Division March 10, 2014 Canada s Energy Sector in a Changing Global Market Kristi Varangu Director, International Energy Division March 10, 2014 2 Purpose Illustrate the profound changes that are taking place in global and North

More information

Rating Methodology for Domestic Life Insurance Companies

Rating Methodology for Domestic Life Insurance Companies Rating Methodology for Domestic Life Insurance Companies Introduction ICRA Lanka s Claim Paying Ability Ratings (CPRs) are opinions on the ability of life insurance companies to pay claims and policyholder

More information

Financing Urbanization

Financing Urbanization Commission des finances locales pour le développement Committee on Local Finance for Development Comisión de Financiación Local para el Desarrollo 1. INTRODUCTION Think Piece on Financing Urbanization

More information

Facilitating Remittances to Help Families and Small Businesses

Facilitating Remittances to Help Families and Small Businesses G8 ACTION PLAN: APPLYING THE POWER OF ENTREPRENEURSHIP TO THE ERADICATION OF POVERTY The UN Commission on the Private Sector and Development has stressed that poverty alleviation requires a strong private

More information

Global growth rates Macroeconomic indicators CEDIGAZ Reference Scenario

Global growth rates Macroeconomic indicators CEDIGAZ Reference Scenario Medium and Long Term Natural Gas Outlook CEDIGAZ February 215 Global growth rates Macroeconomic indicators CEDIGAZ Reference Scenario 4 3 %/year 199-213 213-235 6 Main consuming markets - %/year (213-235)

More information

Keynote Speech, EIB/IMF Meeting, 23 October, Brussels

Keynote Speech, EIB/IMF Meeting, 23 October, Brussels Keynote Speech, EIB/IMF Meeting, 23 October, Brussels Governor Carlos Costa Six years since the onset of the financial crisis in 2008, output levels in the EU are below those observed before the crisis.

More information

TAXATION AND AID FOR DOMESTIC RESOURCE MOBILIZATION (D.R.M.) AID: HELPING OR HARMING DOMESTIC RESOURCE MOBILIZATION IN AFRICA

TAXATION AND AID FOR DOMESTIC RESOURCE MOBILIZATION (D.R.M.) AID: HELPING OR HARMING DOMESTIC RESOURCE MOBILIZATION IN AFRICA TAXATION AND AID FOR DOMESTIC RESOURCE MOBILIZATION (D.R.M.) AID: HELPING OR HARMING DOMESTIC RESOURCE MOBILIZATION IN AFRICA My presentation deals with i. Definition and Importance of Domestic Resource

More information

Export Import Bank Financing Programs

Export Import Bank Financing Programs Export Import Bank Financing Programs The Export Import Bank of the United States (Ex Im Bank) is the official export credit agency of the United States. Ex Im Bank assists in financing the export of U.S.

More information

Mutual Funds in Pakistan

Mutual Funds in Pakistan Mutual Funds in Pakistan Investors Education Seminar arranged by SECP and ICAP held on 29th January 2015 Presented By First Capital Investments Limited Definition of Mutual Fund A mutual fund is a collective

More information

On Corporate Debt Restructuring *

On Corporate Debt Restructuring * On Corporate Debt Restructuring * Asian Bankers Association 1. One of the major consequences of the current financial crisis is the corporate debt problem being faced by several economies in the region.

More information

International Civil Aviation Organization WORLDWIDE AIR TRANSPORT CONFERENCE (ATCONF) SIXTH MEETING. Montréal, 18 to 22 March 2013

International Civil Aviation Organization WORLDWIDE AIR TRANSPORT CONFERENCE (ATCONF) SIXTH MEETING. Montréal, 18 to 22 March 2013 International Civil Aviation Organization WORKING PAPER ATConf/6-WP/88 4/3/13 English only WORLDWIDE AIR TRANSPORT CONFERENCE (ATCONF) SIXTH MEETING Montréal, 18 to 22 March 2013 Agenda Item 2: Examination

More information

2015 Article IV Consultation with Sweden Concluding Statement of the IMF Mission

2015 Article IV Consultation with Sweden Concluding Statement of the IMF Mission 2015 Article IV Consultation with Sweden Concluding Statement of the IMF Mission Sweden s economy is performing well. But housing prices and household debt are elevated and rising and unemployment is high

More information

Rating Criteria for Finance Companies

Rating Criteria for Finance Companies The broad analytical framework used by CRISIL to rate finance companies is the same as that used for banks and financial institutions. In addition, CRISIL also addresses certain issues that are specific

More information

DEBT SUSTAINABILITY ASSESSMENT

DEBT SUSTAINABILITY ASSESSMENT Second Green Power Development Project (RRP BHU 44444) DEBT SUSTAINABILITY ASSESSMENT A. Background 1. Objective. The government of Bhutan has followed an investment driven approach for inclusive economic

More information

Good afternoon, and thanks to the Energy Dialogue for your kind invitation to speak today.

Good afternoon, and thanks to the Energy Dialogue for your kind invitation to speak today. Good afternoon, and thanks to the Energy Dialogue for your kind invitation to speak today. Europe is at the forefront of a global transition to a cleaner energy economy. At the same time globally energy

More information

PPIAF Assistance in Afghanistan

PPIAF Assistance in Afghanistan August 2012 PPIAF Assistance in Afghanistan Emerging from a decade of war, massive support from various development partners has been pouring in over the last few years to help rebuild Afghanistan. PPIAF

More information

MACROECONOMIC AND FISCAL ASSESSMENT

MACROECONOMIC AND FISCAL ASSESSMENT Public Sector Financial Management Program (RRP SAM 46384) A. BACKGROUND MACROECONOMIC AND FISCAL ASSESSMENT 1. Samoa is composed of about 10 islands, 4 inhabited, and several uninhabited islets situated

More information

The Role of Public Policy in Sustainable Infrastructure

The Role of Public Policy in Sustainable Infrastructure The Role of Public Policy in Sustainable Infrastructure Zia Qureshi Nonresident Senior Fellow, Global Economy and Development, Brookings Institution Infrastructure development, economic growth, and climate

More information

ABF PAN ASIA BOND INDEX FUND An ETF listed on the Stock Exchange of Hong Kong

ABF PAN ASIA BOND INDEX FUND An ETF listed on the Stock Exchange of Hong Kong Important Risk Disclosure for PAIF: ABF Pan Asia Bond Index Fund ( PAIF ) is an exchange traded bond fund which seeks to provide investment returns that corresponds closely to the total return of the Markit

More information

Office of Economic Development Finance Infrastructure Bank Paper

Office of Economic Development Finance Infrastructure Bank Paper White Paper Infrastructure Banks A national infrastructure bank has been proposed regularly over the past several years; governors in Massachusetts and New York have proposed or funded such banks; and

More information

ICC 105 19 Rev. 1. 16 October 2012 Original: English. International Coffee Council 109 th Session 24 28 September 2012 London, United Kingdom

ICC 105 19 Rev. 1. 16 October 2012 Original: English. International Coffee Council 109 th Session 24 28 September 2012 London, United Kingdom ICC 105 19 Rev. 1 16 October 2012 Original: English E International Coffee Council 109 th Session 24 28 September 2012 London, United Kingdom Strategic action plan for the International Coffee Organization

More information

ENCOURAGING A DYNAMIC LIFE INSURANCE INDUSTRY: ECONOMIC BENEFITS AND POLICY ISSUES

ENCOURAGING A DYNAMIC LIFE INSURANCE INDUSTRY: ECONOMIC BENEFITS AND POLICY ISSUES ENCOURAGING A DYNAMIC LIFE INSURANCE INDUSTRY: ECONOMIC BENEFITS AND POLICY ISSUES by Gerry Dickinson Professor and Director, Centre for Insurance & Investment Studies, City University Business School,

More information

AIMS AMP Capital Industrial REIT s 3QFY2010 1 financial results

AIMS AMP Capital Industrial REIT s 3QFY2010 1 financial results AIMS AMP CAPITAL INDUSTRIAL REIT MANAGEMENT LIMITED (formerly known as MacarthurCook Investment Managers (Asia) Limited) As Manager of AIMS AMP Capital Industrial REIT (formerly known as MacarthurCook

More information

ALENA RAKAVA SUMMARY

ALENA RAKAVA SUMMARY ENERGY SECURITY OF BELARUS: STEREOTYPES, THREATS, TRENDS 1 ALENA RAKAVA SUMMARY The issue of energy security is on the agenda of many countries. However, the policy debate on energy security often focuses

More information

ECONOMIC REVIEW(A Monthly Issue) March, April, 2015 2014

ECONOMIC REVIEW(A Monthly Issue) March, April, 2015 2014 ECONOMIC REVIEW(A Monthly Issue) March, April, 2015 2014 Economics & Strategic Planning Department http://www.bochk.com Effects The of Reasons CNH Exchange Why the Rate Singapore on Offshore Economy RMB

More information

Philippines Logistics Market Outlook to 2019 - Growth Driven by Express Delivery, 3PL and E-commerce Logistics Services

Philippines Logistics Market Outlook to 2019 - Growth Driven by Express Delivery, 3PL and E-commerce Logistics Services Philippines Logistics Market Outlook to 2019 - Growth Driven by Express Delivery, 3PL and E-commerce Logistics Services Phone: +44 20 8123 2220 Fax: +44 207 900 3970 office@marketpublishers.com Philippines

More information

ENERGY MARKET REFORM

ENERGY MARKET REFORM C A S E S T U D Y O F A S U C C E S S F U L A U S T R A L I A N N A T I O N A L E N E R G Y P R O G R A M M E / S T R A T E G Y ENERGY MARKET REFORM 1. The problem or issue addressed: Efficient and effective

More information

Scheme and Guidelines for India Infrastructure Project Development Fund

Scheme and Guidelines for India Infrastructure Project Development Fund Scheme and Guidelines for India Infrastructure Project Development Fund Department of Economic Affairs Ministry of Finance Government of India Contents Preamble. iii Acronyms and definitions vii 1. The

More information

iii. Vision: promoting Decent Work for Afghan workers (men and women) overseas and regulating foreign workers in Afghanistan.

iii. Vision: promoting Decent Work for Afghan workers (men and women) overseas and regulating foreign workers in Afghanistan. WORKING GROUP PAPER ON ECONOMIC DEVELOPMENT (LABOR MIGRATION) 1 Table of Contents 1- Introduction... 3 2- Importance of regional Cooperation... 3 3- Five priority areas for regional cooperation (inc recommendations...

More information

COMPARISON OF ELECTRICITY GENERATION COST OF NPP WITH ALTERNATES IN PAKISTAN

COMPARISON OF ELECTRICITY GENERATION COST OF NPP WITH ALTERNATES IN PAKISTAN COMPARISON OF ELECTRICITY GENERATION COST OF NPP WITH ALTERNATES IN PAKISTAN IAEA INPRO dialogue forum 8 toward nuclear energy system sustainability: economics, resource availability and institutional

More information

Understanding Fixed Income

Understanding Fixed Income Understanding Fixed Income 2014 AMP Capital Investors Limited ABN 59 001 777 591 AFSL 232497 Understanding Fixed Income About fixed income at AMP Capital Our global presence helps us deliver outstanding

More information

MISSOURI TRANSPORTATION FINANCE CORPORATION LOAN POLICY

MISSOURI TRANSPORTATION FINANCE CORPORATION LOAN POLICY Purpose MISSOURI TRANSPORTATION FINANCE CORPORATION The purpose of this document is to provide written guidelines for the processing of applications and approval of direct loans by the Missouri Transportation

More information

Financing Infrastructure for Connectivity: Policy Implications for Asia

Financing Infrastructure for Connectivity: Policy Implications for Asia Research Policy Brief 33 Financing Infrastructure for Connectivity: Policy Implications for Asia Biswa Nath Bhattacharyay June 2011 The Asian Development Bank Institute s (ADBI) research policy briefs

More information

EU-CELAC Business Summit eucelac-bizsummit2015.eu. Wednesday 10 th June 2015, 14:30-16:30 Concept Note for Workshop 3

EU-CELAC Business Summit eucelac-bizsummit2015.eu. Wednesday 10 th June 2015, 14:30-16:30 Concept Note for Workshop 3 EU-CELAC Business Summit eucelac-bizsummit2015.eu Wednesday 10 th June 2015, 14:30-16:30 Concept Note for Workshop 3 Access to finance and financial instruments The important role of Small and Medium-sized

More information

SECTOR ASSESSMENT (SUMMARY): FINANCE

SECTOR ASSESSMENT (SUMMARY): FINANCE Microfinance Expansion Project (RRP PNG 44304) Sector Road Map SECTOR ASSESSMENT (SUMMARY): FINANCE 1. Sector Performance, Problems, and Opportunities 1. During 2000 2006, the growth in population in Papua

More information

Financing Water Services in the Arab Countries Public Private Participation, PPP The Jordanian Experience

Financing Water Services in the Arab Countries Public Private Participation, PPP The Jordanian Experience Financing Water Services in the Arab Countries Public Private Participation, PPP The Jordanian Experience Private Sector Involvement in Water Infrastructure in Lebanon Eng. Mohammed Bany Mustafa /ACWUA

More information

EU-CELAC Business Summit eucelac-bizsummit2015.eu. Wednesday 10 th June 2015, 14:30-16:30 Concept Note for Workshop 3

EU-CELAC Business Summit eucelac-bizsummit2015.eu. Wednesday 10 th June 2015, 14:30-16:30 Concept Note for Workshop 3 Working Party on Latin America and the Caribbean (COLAC) m.d. : 90/15 source : EEAS for : Information date : 29-04 - 2015 EU-CELAC Business Summit eucelac-bizsummit2015.eu Wednesday 10 th June 2015, 14:30-16:30

More information

Model Answer. M.Com IV Semester. Financial market and financial services. Paper code- AS 2384

Model Answer. M.Com IV Semester. Financial market and financial services. Paper code- AS 2384 Model Answer M.Com IV Semester Financial market and financial services Paper code- AS 2384 1. (I) Money Market is a market for short term loans or financial assets. As the name implies it does not deal

More information

UPDATES TO THE ELABORATION OF AN ENTERPRISE RISK MANAGEMENT PROGRAM FOR THE CLIMATE INVESTMENT FUNDS

UPDATES TO THE ELABORATION OF AN ENTERPRISE RISK MANAGEMENT PROGRAM FOR THE CLIMATE INVESTMENT FUNDS August 22, 2013 UPDATES TO THE ELABORATION OF AN ENTERPRISE RISK MANAGEMENT PROGRAM FOR THE CLIMATE INVESTMENT FUNDS The following decision approving the attached paper on the Updates to the Elaboration

More information

Evaluation of ongoing programmes 2007 TERNA (Technical Expertise for Renewable Energy Application), Ethiopia

Evaluation of ongoing programmes 2007 TERNA (Technical Expertise for Renewable Energy Application), Ethiopia Evaluation of ongoing programmes 2007 TERNA (Technical Expertise for Renewable Energy Application), Ethiopia Brief Report Produced by: AGEG Consultants eg, Kirchheim/Teck, Germany This report was produced

More information

World Economic Forum Insurance and Asset Management Council. Joachim Faber. Low Carbon Economy Finance Paper Q4 2011

World Economic Forum Insurance and Asset Management Council. Joachim Faber. Low Carbon Economy Finance Paper Q4 2011 World Economic Forum Insurance and Asset Management Council Joachim Faber Low Carbon Economy Finance Paper Q4 2011 Frankfurt / Munich, Oct 2011 Introduction The Low Carbon Economy and Finance by the Insurance

More information

Detailed Recommendations 4: Strengthen Discounted Green Loans

Detailed Recommendations 4: Strengthen Discounted Green Loans Detailed Recommendations 4: Strengthen Discounted Green Loans 4 This is a background paper to the report: Establishing China s Green Financial System published by the Research Bureau of the People s Bank

More information

Liberia Leasing Investment Forum

Liberia Leasing Investment Forum Liberia Leasing Investment Forum Finance Leasing in Liberia: June 13-14, 2012 Monrovia, Liberia Leasing is both a source of affordable capital for small and medium-sized businesses and a catalyst for socio-economic

More information

United States of America. Presentation of financial resources available to US investors in Afghanistan; Financial Tools

United States of America. Presentation of financial resources available to US investors in Afghanistan; Financial Tools United States of America Presentation of financial resources available to US investors in Afghanistan; Financial Tools Kabul, February 2007 Research categories for all countries Finance Categories 1. Equity

More information

Why a Floating Exchange Rate Regime Makes Sense for Canada

Why a Floating Exchange Rate Regime Makes Sense for Canada Remarks by Gordon Thiessen Governor of the Bank of Canada to the Chambre de commerce du Montréal métropolitain Montreal, Quebec 4 December 2000 Why a Floating Exchange Rate Regime Makes Sense for Canada

More information

Adjusting to a Changing Economic World. Good afternoon, ladies and gentlemen. It s a pleasure to be with you here in Montréal today.

Adjusting to a Changing Economic World. Good afternoon, ladies and gentlemen. It s a pleasure to be with you here in Montréal today. Remarks by David Dodge Governor of the Bank of Canada to the Board of Trade of Metropolitan Montreal Montréal, Quebec 11 February 2004 Adjusting to a Changing Economic World Good afternoon, ladies and

More information

GHANA S IMF PROGRAM - THE RISK OF FISCAL CONSOLIDATION WITHOUT STRONG FISCAL POLICY RULES. Commentary

GHANA S IMF PROGRAM - THE RISK OF FISCAL CONSOLIDATION WITHOUT STRONG FISCAL POLICY RULES. Commentary GHANA S IMF PROGRAM - THE RISK OF FISCAL CONSOLIDATION WITHOUT STRONG FISCAL POLICY RULES Introduction Commentary Mohammed Amin Adam, PhD Africa Centre for Energy Policy Following macroeconomic challenges

More information

Chairman Wyden, Ranking Member Hatch and members of the Committee, my name is Jay

Chairman Wyden, Ranking Member Hatch and members of the Committee, my name is Jay Testimony of Jayan Dhru Senior Managing Director, Corporate & Infrastructure Ratings Standard & Poor s Ratings Services Before the Senate Committee on Finance New Routes for Funding and Financing Highways

More information

Mr Duisenberg discusses the role of capital markets and financing in the euro area Speech by Willem F Duisenberg, President of the European Central

Mr Duisenberg discusses the role of capital markets and financing in the euro area Speech by Willem F Duisenberg, President of the European Central Mr Duisenberg discusses the role of capital markets and financing in the euro area Speech by Willem F Duisenberg, President of the European Central Bank, at the Waarborgfonds Sociale Woningbouw in Utrecht,

More information

The Economic Benefits of Aviation and Performance in the Travel & Tourism Competitiveness Index

The Economic Benefits of Aviation and Performance in the Travel & Tourism Competitiveness Index CHAPTER 1.4 The Economic Benefits of Aviation and Performance in the Travel & Tourism Competitiveness Index JULIE PEROVIC International Air Transport Association (IATA) The aviation industry supports tourism

More information

HOUSING FINANCE IN TRANSITION ECONOMIES

HOUSING FINANCE IN TRANSITION ECONOMIES HOUSING FINANCE IN TRANSITION ECONOMIES OECD Workshop Warsaw, Poland December 5-6, 5 2002 Loïc Chiquier The World Bank 1 Challenge in Transition Economies! Key for growth, poverty, wealth (75 wealth),

More information

The Positive Role of Audit in Public Debt Management in China

The Positive Role of Audit in Public Debt Management in China The Positive Role of Audit in Public Debt Management in China (for the 1 st ASOSAI-EUROSAI Joint Conference) September 2011, Turkey By Dr. DONG Dasheng, the first Deputy Auditor Introduction Since 2008,

More information

Development of Public Private Partnerships (PPPs) in China

Development of Public Private Partnerships (PPPs) in China Development of Public Private Partnerships (PPPs) in China Dr Paul H K Ho Chairman, Quantity Surveying Division The Hong Kong Institute of Surveyors Associate Head, Division of Building Science and Technology

More information

Directors Review. Domestic Economy

Directors Review. Domestic Economy Directors Review On behalf of the Board of Directors, I am pleased to present the condensed interim unconsolidated financial statements for the half year ended June 30, 2015. Domestic Economy Pakistan

More information

Mecklenburg County, North Carolina Debt Policy

Mecklenburg County, North Carolina Debt Policy Mecklenburg County, North Carolina Debt Policy Introduction Mecklenburg County recognizes that one of the keys to sound financial management is a debt policy. These benefits are recognized by bond rating

More information

GEORGIA STATE FINANCING AND INVESTMENT COMMISSION (GSFIC) Policy and Procedures, Owner Commission

GEORGIA STATE FINANCING AND INVESTMENT COMMISSION (GSFIC) Policy and Procedures, Owner Commission GEORGIA STATE FINANCING AND INVESTMENT COMMISSION (GSFIC) Policy and Procedures, Owner Commission Policy Title/Number QUALIFIED INTEREST RATE MANAGEMENT AGREEMENTS FOR STATE AUTHORITIES Effective Date:

More information

Recommendation for a COUNCIL RECOMMENDATION. on the 2015 National Reform Programme of Portugal

Recommendation for a COUNCIL RECOMMENDATION. on the 2015 National Reform Programme of Portugal EUROPEAN COMMISSION Brussels, 13.5.2015 COM(2015) 271 final Recommendation for a COUNCIL RECOMMENDATION on the 2015 National Reform Programme of Portugal and delivering a Council opinion on the 2015 Stability

More information