Financing water supply and sanitation investments : utilizing risk mitigation instruments to bridge the financing gap

This paper explores some of the issues in the deployment of risk mitigation instruments to attract more financing from both public an private sources to water supply and sanitation projects. The World Panel on Financing Water Infrastructure chaired by Michel Camdessus drew attention to the finance challenges of reaching the MDGs in water supply and sanitation. Risk mitigation instruments can indeed provide added assurances to lenders and private sponsors to reduce or nullify unacceptable risks of doing business in economies that have not yet demonstrated a sustained track record of   reliability. But the experiences in the use of risk instruments in WSS has not been at all encouraging. The paper shows how problems in the sector are in fact much more deep-routed, particularly since the financial crises in East Asia and Latin America.