WASHINGTON, D.C., June 16, 1999 --- Project finance in emerging markets took a beating during recent financial turmoil, but the method of financing projects through their own revenues and assets will rebound in an environment of the stronger markets, fairer regulations, and more inviting business policies being introduced in many developing countries, the International Finance Corporation says in a new book.
Through IFC's own experience, Project Finance in Developing Countries tracks the steady and rapid increase of project financing in developing countries since the mid-1970s, spurred by globalization and by more welcoming policies in recipient countries. The 1997-98 financial crisis in emerging markets curtailed financing for new projects, but the book sees that period as only a temporary setback.
Project finance is well-suited for financing projects, even in relatively risky environments, because it relies primarily on the revenues and assets of the project itself to ensure repayment to investors. Investments are structured around an appraisal of the risks and potential returns and on sharing those risks, costs, and rewards among unrelated sponsors and investors.
IFC was a pioneer in using project finance to invest in developing countries and in the past decade has invested in over 230 projects, valued at more than $30 billion. The book draws on that experience to describe the major international trends in project finance, significant risks in project structuring, and the key ingredients of successful project financing.
This volume is the seventh in IFC's Lessons of Experience series. Previous volumes review IFC's experience in developing countries with privatization, investment funds, leasing, financing private infrastructure, foreign direct investment, and financial institutions.
Since its establishment in 1956, IFC has been investing in the private sector in developing countries, sharing full commercial risks without government support or guarantees. Part of the World Bank Group, IFC also fosters economic growth in the developing world by mobilizing capital in the international financial markets and providing technical assistance and advice to governments and businesses. The mission of IFC is to promote private sector investment in developing countries, which will reduce poverty and improve people's lives.
This book may be ordered by calling World Bank Publications at 1-800-645-7247 or by e-mail to books@worldbank.org.
Journalists can obtain Project Finance in Developing Countries free of charge by contacting Lana Moriarty at 202-473-6005 (phone), 202-974-4384 (fax), or lmoriarty@ifc.org (e-mail).
