Philippine Water Revolving Fund (PWRF)
- Ashu Sikri (Unlicensed)
“The PWRF on-lends concessional funding sourced originally from JBIC through the Development Bank of the Philippines (DBP), blending it with funds from domestic private commercial banks to be lent out in support of water projects. The average financing ratio has been about 50–75 percent from a DBP/JBIC loan, and 25–50 percent from private lenders. The loans offer favorable concessional terms, specifically an effective interest rate that is slightly lower than the prevailing market rate and longer maturities. This helps address two key barriers for the mobilization of private finance: short tenors and high costs of borrowing.”
The govt of the Philippines provides a guarantee to JBIC which provides concessional funds to the Development Bank of the Philippines which helps fund the water revolving fund.
Local Government Unit Guarantee Corp is interesting; a Philippines based entity that can intercept tax revenue that flows from Central to Local Govt Units and use that money to make investors whole.
Reminiscent of the “Local Debt Service Reserve Fund” used in the TN Urban Pooled Finance Facility
“From inception through 2014 the PWRF successfully channelled more than US$234 million in loans for water and sanitation projects to finance 21 water and sanitation projects, of which approximately 60 percent came from private banks. An estimated six million people have benefited from the new or improved access to piped water.
To date there have been no defaults on loan repayment. Domestic banks have started lending to water districts on their own, and this is credited to the confidence build- ing and impetus of using a blended finance approach implemented through the revolving fund. “
