The Challenge of Financing Urban Infrastructure for Sustainable Cities
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This paper provides a comprehensive estimate of the subnational need for urban infrastructure to meet the growing demands for public services in medium-sized emerging cities in Latin America and the Caribbean (LAC). Based on an assessment of 40 medium-sized emerging cities in LAC, estimates show the cities will require US$23.5 billion in urban investment to meet the growing demands in the region. While such investment demands for urban infrastructure present opportunities to leverage public sector resources to mobilize private investment, this exceeds the financial capabilities of the involved sub-national governments. In this context, this paper aims at providing new insights on the urban infrastructure demand and explores other financing mechanisms and instruments available to support sustainable urban infrastructure financing at the sub-national level. The paper also provides new insights from the experiences and lessons learned from other international financial institutions (IFIs) in sub-sovereign urban infrastructure financing. Lastly, the document proposes actions for the consideration of the IDB to overcome the constraints faced by the mid-cities and for the long-term financing of urban infrastructure investment.