Project Finance in Developing Countries : Lessons of Experience Number 7

This volume describes IFC's greenfield project finance activities over the past decade, initially against the background of rapid growth in capital flows and project finance activities in developing markets and then in light of their subsequent recent slowdown.

In the past twenty years there has been a new wave of global interest in project finance as a tool for economic investment. Project finance helps finance new investment by structuring the financing around the project's own operating cash flow and assets,without additional sponsor guarantees. Thus the technique is able to alleviate investment risk and raise finance at a relatively low cost, to the benefit of sponsor and investor alike. Though project finance has been in use for hundreds of years, primarily in mining and natural resource projects, its other possible applications-especially for financing large greenfield projects (new projects without any prior track record or operating history) -have only recently received serious attention. This is particularly so in developing markets.