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Subnational governments

Maximizing concessional resources with guarantees—a perspective on sovereigns and sub-nationals

Sebnem Erol Madan's picture


Photo: Debbie Hildreth Pisarcik | Flickr Creative Commons

Several years ago, after almost two decades at various investment banks, I joined the World Bank’s Financial Solutions team. I had always thought of the World Bank as the leading concessional lender to governments, the financial muscle behind large infrastructure projects, and the coveted supranational client of investment banks. I have since discovered the power of World Bank guarantees and how they can help borrowers maximize their World Bank country envelopes. Since joining, I have helped various clients raise over $2 billion in commercial finance. And all this with a fraction of World Bank exposure.

What are we talking about when we talk about “subnational” governments?

Arturo Herrera Gutierrez's picture


Municipality of Guatapé in Colombia. Photo - Adrienne Hathaway / World Bank

Over the last 25 years, the relevance of local governments (states, provinces, municipalities, etc.) in Latin America has been constantly increasing. The process started with a wave of decentralization, particularly in the education and health sectors, followed by the increasing of other responsibilities of local governments (with the accompanying budget!), and most recently topped off by the allocation of additional investment resources fueled by the commodities boom of the mid-2000s. Currently, in some countries, half of the national budget is now allocated to lower levels of governments.

What are we talking about when we talk about “subnational” governments?

Arturo Herrera Gutierrez's picture
Municipality of Guatapé in Colombia. Photo - Adrienne Hathaway / World Bank
Municipality of Guatapé in Colombia. Photo - Adrienne Hathaway / World Bank


Over the last 25 years, the relevance of local governments (states, provinces, municipalities, etc.) in Latin America has been constantly increasing.

The process started with a wave of decentralization, particularly in the education and health sectors, followed by the increasing of other responsibilities of local governments (with the accompanying budget!), and most recently topped off by the allocation of additional investment resources fueled by the commodities boom of the mid-2000s. Currently, in some countries, half of the national budget is now allocated to lower levels of governments.

The World Bank has a long history supporting countries in the region as they transition political, administrative, and fiscal responsibilities to subnational levels, as part of national strategies for strengthening democracy, transparency, and efficient service delivery.