For subnational financing, IFC gives creditworthy local and state entities the opportunity to invest in infrastructure projects without taking sovereign guarantees.
This is a novel approach to development infrastructure, as traditionally the World Bank has invested in municipalities through government guarantees as required by its charter. The International Finance Corporation, however, has invested in a wide range of subsovereign infrastructure projects but always through private sector sponsorship.
By bringing together the World Bank public policy experience and IFC's credit culture and market expertise, the Subnational Finance Department intends to fill a gap in a potentially large market where the opportunities for impact are immense.
The subnational finance initiative builds on and seeks to scale up similar efforts undertaken by the Municipal Fund.