Local Government Finance is Development Finance – Policy Brief

Topic :

The current global financial architecture does not provide cities with adequate access to financing for their transition to a green and productive urban future. The key to that future is local government finance, which connects people, planet and government. Local government finance is development finance, without which people’s quality of life, planetary health and government function are insecure. The repurposing of local government finance is a vehicle to accelerate environmentally sustainable and inclusive development.

The Malaga Global Coalition for Municipal Finance created by UNCDF and UCLG in collaboration with FMDV advocates for a global financial ecosystem that works for cities and local governments. Based on the outcomes of the first two Malaga Coalition Conferences, five elements of the financial ecosystem have been identified as the policy agenda towards the Third Conference: intergovernmental fiscal transfers, own source revenue, domestic capital markets for long-term debt financing, city friendly equity finance, and a guarantee fund for cities.

These five interlinked elements will create an ecosystem for sustainable subnational financing, ensuring that external investment is balanced with strengthened local revenue and capital markets, and further reinforced with mechanisms to defray sovereign credit rating risk.

Read More about the 5 elements of the Malaga Coalition in this report.

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