Financing for Development_Final Project

1. Final Project
Learning from the course
What all is needed for private financing
Author: Jyotsna

2. Right economic environment for attracting private financers
• Stable macro environment
• Low Debt/GDP ratio
• Low inflation
• Tight fiscal deficit
• Removing red tape in the way of
investment
• Rule of law
• Healthy competition
• Right risk allocation and management
• Consistency in regulatory environment
• Bilateral government
• Work towards ‘Financial return and Social
return’

3. Obstacles for private financing
Affordability Vanity projects
Politician
Interference
Lack of transparency Closed Economy
• Affordability of a project is considered to be major obstacle
• Vanity projects are those which are not aligned with the key purpose , therefore fails for very purpose of
financing
• Politician interference hinder private investors to finance as it leads to various uncertainties
• Less transparent policies discourage private investors to finance projects
• Its difficult for investors to enter in closed economy and economies with providing lesser incentives for
FDI’s

4. Reforms needed by government
Government
Fiscal marketLegal system
• Government
– Optimum government interference
– Sovereign immunity
• Legal system
– Easy and transparent dispute resolution
– Government to bear risk in case of any
dispute
• Fiscal market
– Foreign currency exchange
– Foreign Exchange control
– Free flow of capital
– Sourcing of derivative and Swaps