Book contents
- Frontmatter
- Contents
- Preface to the Third Edition
- Preface to the Second Edition
- Preface to the First Edition
- PART ONE AN INTRODUCTION TO PROJECT FINANCE
- PART TWO RISK IDENTIFICATION, ALLOCATION, AND MITIGATION
- PART THREE PROJECT FINANCE STRUCTURES
- PART FOUR TECHNICAL, POLITICAL, AND ECONOMIC FEASIBILITY
- CHAPTER EIGHT THE FEASIBILITY STUDY AND NEEDS ASSESSMENT
- CHAPTER NINE HOST-COUNTRY BUSINESS ENVIRONMENT FOR PROJECT FINANCE
- CHAPTER TEN ECONOMIC FEASIBILITY
- CHAPTER ELEVEN ENVIRONMENTAL REGULATION AND ENVIRONMENTAL FEASIBILITY OF THE PROJECT
- PART FIVE PROJECT FINANCE DOCUMENTATION
- PART SIX CREDIT ENHANCEMENT
- PART SEVEN DEBT AND EQUITY FINANCING
- PART EIGHT COLLATERAL
- PART NINE PROJECT SPONSOR AND INVESTOR AGREEMENTS
- PART TEN SPECIAL TOPICS IN PROJECT FINANCE
- Appendix A A Checklist of Due Diligence Considerations for a Project Financing
- Appendix B UNCITRAL Legislative Guide on Privately Financed Infrastructure Projects
- Project Finance Terms, Abbreviations, and Acronyms
- Select Bibliography
- Index
CHAPTER NINE - HOST-COUNTRY BUSINESS ENVIRONMENT FOR PROJECT FINANCE
from PART FOUR - TECHNICAL, POLITICAL, AND ECONOMIC FEASIBILITY
Published online by Cambridge University Press: 05 June 2012
- Frontmatter
- Contents
- Preface to the Third Edition
- Preface to the Second Edition
- Preface to the First Edition
- PART ONE AN INTRODUCTION TO PROJECT FINANCE
- PART TWO RISK IDENTIFICATION, ALLOCATION, AND MITIGATION
- PART THREE PROJECT FINANCE STRUCTURES
- PART FOUR TECHNICAL, POLITICAL, AND ECONOMIC FEASIBILITY
- CHAPTER EIGHT THE FEASIBILITY STUDY AND NEEDS ASSESSMENT
- CHAPTER NINE HOST-COUNTRY BUSINESS ENVIRONMENT FOR PROJECT FINANCE
- CHAPTER TEN ECONOMIC FEASIBILITY
- CHAPTER ELEVEN ENVIRONMENTAL REGULATION AND ENVIRONMENTAL FEASIBILITY OF THE PROJECT
- PART FIVE PROJECT FINANCE DOCUMENTATION
- PART SIX CREDIT ENHANCEMENT
- PART SEVEN DEBT AND EQUITY FINANCING
- PART EIGHT COLLATERAL
- PART NINE PROJECT SPONSOR AND INVESTOR AGREEMENTS
- PART TEN SPECIAL TOPICS IN PROJECT FINANCE
- Appendix A A Checklist of Due Diligence Considerations for a Project Financing
- Appendix B UNCITRAL Legislative Guide on Privately Financed Infrastructure Projects
- Project Finance Terms, Abbreviations, and Acronyms
- Select Bibliography
- Index
Summary
INTRODUCTION
An understanding of the macroeconomic environment of a host country for a project is crucial to the success of a project financing. It must be stable enough to encourage long-term investments by developers and loans by financial institutions; stability is a crucial element of project finance. Countries that enjoy stable exchange rates and inflation and predictable political environments are more likely to foster successful project financings, without the need for multilateral support.
Also, the roles of foreign investors, foreign lenders, the host government, and the World Bank with respect to the project must be clearly understood by the local electorate and political leaders. In short, a consensus must be established in the country to promote the stability and foreign investment required in a project financing. Further, the laws and regulations of the host country must reflect that understanding in a clear and predictable way.
POLITICAL CONDITIONS
Political risks in a cross-border project financing can emerge from several sources. Principally, these are
the degree of political stability;
government attitudes about foreign investment (whether through policies involving currency exchange, repatriation, taxation, private sector involvement in infrastructure (so-called privatization), or infrastructure need);
the extent of government involvement in the economy of the host country; and
the economic projections for the host country.
- Type
- Chapter
- Information
- The Law and Business of International Project FinanceA Resource for Governments, Sponsors, Lawyers, and Project Participants, pp. 99 - 102Publisher: Cambridge University PressPrint publication year: 2007