Local governments in developing countries are often responsible for providing much of a country’s public infrastructure. Given the usual magnitude of the infrastructure gap and the limited opportunities for capital financing available to local governments this situation may seriously hamper development. Although the relative advantage of delivering infrastructure services at the local level varies both with circumstances and the infrastructure concerned, there is often a strong case for unbundling responsibilities for these services by sub-function or by stages of the project cycle, with some responsibility falling to the local level. Alternative sources of infrastructure finance – local taxes, user charges, transfers, debt, public–private partnerships – are considered, especially common current practices and some successful experiences.
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