Public Sector Investment Facility (PIF) Henna-Riikka Pihlapuro Ministry for Foreign Affairs Unit for Development Finance and Private Sector Cooperation (KEO-50)
Public Sector Investment Facility (PIF) – Funding for developing-country public investments • PIF is one of Finland’s development policy finance instruments • PIF financing is a form of concessional investment credit. Its purpose is to: (i) support developing countries public sector investments aligned with UN sustainable development goals (SDGs) (ii) make use of Finnish technology and know-how 27.5.2019 2
Public Sector Investment Facility (PIF) – Funding for developing-country public investments • Mixed export credit Basics instrument • Tied aid Actors Aim Countries • Public sector entity • Finnish enterprise Supports economically • LMICs + LDCs/LICs MFA • viable but commercially • Meets principles of • Finnvera non-viable public sector sustainable lending • Financial institution investments in • Finnvera’s guarantee in European developing countries Economic Area 27.5.2019 3
Public Sector Investment Facility (PIF) – Funding for developing-country public investments Criteria Funding (Commercial loan) • • Interest subsidy Finland’s development policy program • Guarantee subsidy (above 6 %) • Lump-sum of the investment Uses Finnish equipment, technology, expertise and services Grant equivalent (min. 30 % Finnish content) (50 % LDCs, 35 % LICs/LMICs) Procurement according to legislation Projects (subsidy) ranging between in developing countries 5−30 million euros Eligible for export credit 10 % for capacity development Eligible for Finnvera’s guarantee MFA and a developing country cofinance the project 27.5.2019 4
Public Sector Investment Facility (PIF) – Funding for developing-country public investments Consider, as an illustrative example, an investment in a water treatment plant in a lower middle income country that costs 8.5 million euros to build with funding costs of 1.5 million euros. The Government of Finland can support the project with 3.5 million euros (35% of 10 million euros). This would be used to pay for the funding costs (1.5 million euros) and part of the investment (2 million euros). In this example the country would take a loan of 6.5 million euros at 0% interest rate to fund an 8.5 million euro investment. 27.5.2019 5
Public Sector Investment Facility (PIF) – Funding for developing-country public investments 27.5.2019 6
Public Sector Investment Facility (PIF) – Funding for developing-country public investments Project concept note Deadline 5 April 2019 Feasibility Study; Reporting & Due Diligence evaluating results Clearance Procurement; Implementation Signing commercial contract Final grant approval (MFA) 27.5.2019 7
Public Sector Investment Facility (PIF) – Funding for developing-country public investments Finnvera reserves the right to changes 27.5.2019 8
Public Sector Investment Facility (PIF) – Funding for developing-country public investments 3/2018 1/2017 23 concept papers (Vietnam 6) 23 21 21 concept papers (Vietnam 11) (413 milj. €; MFA 162 milj.€) (405 milj. €; MFA 152 milj. €) 4 concepts approved for further developing 4 concepts approved for further developing (74,6 milj €; MFA 26,1 milj.€ ) ( 58,2 milj. €; MFA 22,7 milj.€) Indonesia, Honduras, Vietnam, Kenya Vietnam (2), Myanmar, Uzbekistan 4/2019 2/2017 18 concept papers (Vietnam 4) 18 25 concept papers (Vietnam 4) 25 (303,7 milj. €; MFA 107,7 milj.€) (463 milj. €; MFA 197 milj. €) Process is still ongoing and concepts are not 3 concepts approved for further developing yet approved for further developing (68 milj. €; MFA 29,5 milj.€ ) Ethiopia, Nepal, Sri Lanka 27.5.2019 9
Thank You! Contact: Hannele Tikkanen hannele.tikkanen@formin.fi Henna-Riikka Pihlapuro henna-riikka.pihlapuro@formin.fi Please see the PIF Guidance Notes and MFA webpage for more information: https://um.fi/public-sector-investment-facility 27.5.2019 10
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