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This document outlines a strategic process for local governments to navigate financial crises by leveraging Local Government Financing Platforms (LGFPs). It details how Local Government #1 can reclaim funds from a financing platform to repay its debts, and explores alternative borrowing methods when access to banks is limited. By establishing a LGFP under its control, Local Government #1 can facilitate new borrowing options and fund critical projects, ensuring resilience and sustainability in local governance amidst financial instability.
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Risking the future for the present Crisis Response
Local Government Financing Platforms – Process 1 • Local Govt #1 takes back the money from the platform • It then uses the funds to pay back its debt to Local Govt. #2 • Local Govt. #1 is unable to borrow directly from Banks / Capital markets • Local Govt. #1 Borrows instead from Local Govt. #2 • Loan is used to found and Capitalize a LGFP under Govt. #1’s control • Local Govt. Financing Platform #1 is able to borrow from Banks • Financing Platform can borrow from Banks • Financing Platform funds projects Local Government #1 Loan PROJECT Local Government #2 Repays Loan Controls Capital Injection PROJECT Financing Loan Loan Local Govt. #1’s Financing Platform $$$$BANK$$$$ Loan $$$$BANK$$$$
