Local Government Funding Agency
Encyclopedia
A Local Government Funding Agency (LFGA) is financial institution
that serves as a vehicle for local and regional authorities such as municipalities, county councils and regions to access capital markets for the purpose of jointly procuring credit for public investment projects. The local and/or regional authorities of a country own the LGFA, sometimes with a minor ownership by the state. It works as a co-operative agency where the participating authorities come together in order to ensure low interests rates on loans, based on the creditworthiness of the participating members. This co-operation can also help the local authorities to achieve a higher credit rating than if they act independently. The agency normally does not seek to make profits and any surplus is usually reinvested in the activities. LGFAs exist and operate within the borders of the respective countries where they are found.
Financial institution
In financial economics, a financial institution is an institution that provides financial services for its clients or members. Probably the most important financial service provided by financial institutions is acting as financial intermediaries...
that serves as a vehicle for local and regional authorities such as municipalities, county councils and regions to access capital markets for the purpose of jointly procuring credit for public investment projects. The local and/or regional authorities of a country own the LGFA, sometimes with a minor ownership by the state. It works as a co-operative agency where the participating authorities come together in order to ensure low interests rates on loans, based on the creditworthiness of the participating members. This co-operation can also help the local authorities to achieve a higher credit rating than if they act independently. The agency normally does not seek to make profits and any surplus is usually reinvested in the activities. LGFAs exist and operate within the borders of the respective countries where they are found.
LGFAs by country
- Denmark (Kommunekredit, 1898)
- Holland (Bank Nederlandse GemeentenBank Nederlandse GemeentenThe Bank Nederlandse Gemeenten is a Dutch bank and Local Government Funding Agency, specializing in providing financing for publicly owned organizations. Ranked by assets alone, it is ranked as the 4th bank in the Netherlands...
, 1914) - Norway (KommunalbankenKommunalbankenKommunalbanken, sometimes branded as Kommunalbanken Norway is a Norwegian bank that offers loans exclusively to the municipal and county sector. The banks portfolio was NOK 76.7 billion as of 2006, and 45 % of all municipal and county debt is though Kommunalbanken, with about 95% of all counties...
, 1927), n.b. owned by the state. - Holland (Nederlandse Waterschapsbank, 1954)
- Canada (Municipal Authority of British Columbia, 1970)
- USA (various municipal bondbanks such as: Vermont Municipal Bond Bank, 1970; Maine Municipal Bond Bank[; Sunshine State Governmental Financing Commission, 1985; and others)
- Switzerland (Emissionszentrale der Schweizer Gemeinden, 1971)
- Sweden (KommuninvestKommuninvestKommuninvest is a Local Government Funding Agency that was setup in 1986 by Lars Andersson, former finance officer of the municipality of Örebro, Sweden...
, 1986) - Finland (Municipality Finance, 1989)
- Italy (Cassa del Trentino, 2005)
Further Reading
- Decentralization and local Democracy in the World (Barcelona: United Cities and Local Governments, 2009), p. 149, ISBN 97-80821377-34-5
- Financing Urban Shelter: Global Report on Human Settlements (London: Earthscan, 2005), p. 42, ISBN 92-11317-39-8
- Henry A. Davis (ed), Infrastructure Finance: Trends and Techniques (London: Euromoney, 2008), p. 68.
- Michael Barker (ed), Financing State and Local Economic Development (Durham, NC.: Duke University Press, 1983), p. 134-135