Building Subnational Debt Markets in Developing and Transition Economies : A Framework for Analysis, Policy Reform, and Assistance Strategy

Noel, Michel

World Bank, Washington, DC

关键词: ACCOUNTING;    ADVERSE SELECTION;    AGENCY PROBLEMS;    ALLOCATION CRITERIA;    ALLOCATION OF CAPITAL;   

DOI  :  10.1596/1813-9450-2339
RP-ID  :  WPS2339

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

Subnational debt markets can be apowerful force in a country's development. Throughdelegated monitoring by financial intermediaries and throughdebt placed directly with investors, subnational debtmarkets account for about 5 percent of GDP in Argentina andBrazil. But they remain embryonic in most developing andtransition economies. To resolve a potential clash betweenthe increased financing needs of subnational entities andthe limited development of domestic subnational debtmarkets, it is critical to support the orderly, efficientemergence of such debt markets. As a framework for policyreform, the following steps (mirroring typical weaknesses)are prerequisites for developing a country'ssubnational debt market: reducing moral hazard, improvingmarket transparency, strengthening market governance,establishing a level playing field, and developing localcapacity for accounting, budgeting, and financialmanagement. In countries where the government shows a clearcommitment to market development, says the author, the WorldBank should support the framework needed for policy-basedoperations that establish hard budget constraints. In doingso, the Bank should concentrate on 1) supporting nationaland local capacity building in those areas essential fordeveloping a subnational debt market; and 2) financingspecific subnational projects with strictly nonrecourseloans. At the same time, the Bank should offer a variety oflending and guarantee instruments that encourage privatefinancing for investments by subnational entities-including,for example, equity participation in (or lines of credit orpartial credit guarantees to) financial intermediariesspecializing in subnational investment finance or in fundsfor financing local infrastructure.