Dear friends, greetings from Tanzania! As we join this community of practice, we all become active stakeholders of the broader City Creditworthiness Initiative. This is part of a ground-breaking effort to reach 300 cities in developing countries over four years to help them plan for a low-carbon future and get the needed finance flowing (LINK to announcement by World Bank President Jim Yong Kim, Sep 2013).
Working on cities’ creditworthiness with counterparts around the world, particularly at the central government level, I realize that the expression “creditworthiness” can be misleading. The first problem is that the term evokes scenarios of decentralized authorities going financially rogue, tapping (international!) capital markets without consideration for fiscal responsibility and contingent liabilities. This is a big concern for central governments, and rightly so. However, strengthening cities’ creditworthiness means first and foremost improving their financial performance, it means putting cities on a clear path toward better services, better administration, better governance, better value for tax-payers’ money. And by improving their financial practices and fundamentals, cities are also in a better shape (not worse!) to comply with country-wide policies and regulations (LINK to Financial Times article quoting PPIAF's Creditworthiness Initiative, April 2014)
That’s why I fully identify with creditworthiness as a goal and I remain very keen to support cities’ creditworthiness. It’s not about credit rating agencies, it’s not about investors looking for quick wins, it’s not about cities seeking to secede from country-level jurisdictions… ! Creditworthiness is about strengthening the cities’ bottom line, setting for themselves the highest standards, improving the way they function on a daily basis and the way they plan on a long-term basis. This is the way I understand creditworthiness, to put reform-minded cities on the map of high performing cities and on the path toward sustainable development (LINK to World Bank feature story on Municipal Finance, April 2014) .
I look forward to engaging with members of this community of practice (LINK to share your professional contacts on our online directory) and I encourage all of us to bring forward challenges and questions so that we can benefit from everybody’s experience. While most cities cannot tap capital markets for long-term investments (yet!), they sure can tap global knowledge on this online community!
Senior Municipal Finance Specialist, World Bank Group
City Creditworthiness Initiative