Urban Innovations and Best Practices: Strengthening Financial Intermediary for Infrastructure Development in Local Authority
Asian Development Bank | October 2009
Abstract
Since 2006, the Government of Sri Lanka has been implementing a $66.7 million Local Government Infrastructure Improvement Project (LGIIP), including a $50 million loan from the Asian Development Bank (ADB). Conceptually, the LGIIP conforms to government policies regarding decentralization of powers and aims to further strengthen the local authorities (LAs) in the country through institutional strengthening and capacity building of Local Loans and Development Fund (LLDF) and LAs in providing improved basic urban services to citizens, such as water supply, urban roads, drainage and sewerage, solid waste management, and small-scale community buildings. A typical size of subprojects is about $0.5 million. With the LGIIP’s innovative design, LAs are responsible for identifying, preparing, and implementing subprojects, while LLDF is responsible for appraising, approving, monitoring, and evaluating these subprojects. At the beginning, LAs did not have adequate expertise to prepare and implement subprojects; similarly, LLDF did not have adequate capacity to appraise, monitor, and evaluate the subprojects. LLDF was earlier associated with two other ADB projects (only for loan recovery)—one in the urban development sector and another in agriculture. Both projects were not implemented by LLDF, which was brought merely as a debt collecting agency at a late stage. The LGIIP reflects a paradigm shift as it fully involves LLDF and LAs in implementation from the beginning. LAs have developed a sense of ownership of and expertise in implementing the subprojects. LLDF is transforming into an effective implementing agency and gaining valuable experience to become a sustainable financial intermediary in the long run.
Citation
Asian Development Bank. 2009. Urban Innovations and Best Practices: Strengthening Financial Intermediary for Infrastructure Development in Local Authority. © Asian Development Bank. http://hdl.handle.net/11540/2778. License: CC BY 3.0 IGO.Keywords
Urban Development Finance
Trade Finance
Small Business Finance
Rural Finance
Roundtable on International Trade and Finance
Regional Development Finance
Public Service Finance
Public Finance
Project Finance
Private Finance
Nonbank Financing
Non-Bank Financial Institutions
Municipal Finance
Local Government Finance
Local Currency Financing
Limited Resource Financing
International Financial Institutions
Infrastructure Financing
Industrial Finance
Government Financial Institutions
Government Finance
Financing of Infrastructure
Financial Sector Development
Financial Regulation
Taxation
Public Accounting
National Budget
Municipal Bonds
Local Government
Local Taxes
International Monetary Relations
International Financial Market
International Banking
Central Banks
Business Financing
Capital Resources
Budgetary Policy
Capital Needs
Corporate Divestiture
Capital Instruments
Pension Funds
Insurance Companies
Banks
Portfolio Management
Fiscal Administration
Economics of Education
Development Banks
Use tax
Taxing power
State of taxation
Tax-sales
Tax revenue estimating
Tax planning
Spendings tax
Special assessments
Tax administration and procedure
Sales tax
Real property and taxation
Progressive taxation
Effect of taxation on land use
Effect of taxation on labor supply
Intergovernmental tax relations
Inheritance and transfer tax
Energy tax
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