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IDB Mayors Forum: How to finance the sustainable development of cities?

April 25, 2023 por Red de Ciudades - Editor: Daniel Peciña-Lopez Leave a Comment

Este artículo está también disponible en / This post is also available in: Spanish


Our region is the most urbanized in the developing world, concentrating close to 6.4% of the global population. Eight out of every ten people in Latin America and the Caribbean (LAC) live in cities, and data indicate that the urban population will continue to grow in the coming decades, reaching 85% by 2050. This means that municipal governments must prepare to respond to the needs of a growing population, and with it, their needs.

Cities have the potential to increase productivity, lift people out of poverty, and address climate changes. However, they do not necessarily have the resources required to reach their maximum capacity, and thus meet the housing, transportation, and equipment needs of their inhabitants. Achieving sustainable and inclusive growth will only be possible if municipalities have the necessary capacities and resources.

From the IDB Group, as the main allies of LAC cities, we believe it is time to think about new forms of financing and develop innovative strategies that allow our cities to grow sustainably and continue improving lives. Read on to learn more!

Why is it necessary to work to improve the financing of cities?

Subnational governments are the administrative level closest to the needs of the population. They oversee crucial services for citizen welfare, such as electricity, water, transportation, waste, public infrastructure, etc. In some countries of the region, they also manage services such as education, health, and security.

The accelerated process of urbanization in LAC presents the region’s mayors with a formidable challenge because the lack of investment in cities is one of the greatest barriers to their growth and development. How to address unemployment, housing shortages or the need to improve health and education systems with limited access to financing? How to enable more efficient, accessible, and safe mobility in congested cities suffering from serious pollution problems? Are we prepared to adapt cities to the effects of climate change? Can municipalities meet these challenges with limited financial resources and reduced resources as a result of the pandemic? There are many questions, and they all have the same answer: we need to work together to strengthen and diversify city financing, sharing knowledge and lessons learned to solve these common challenges.

Cities are responsible for services that are crucial to citizens’ well-being, such as electricity, water, transportation, waste, public infrastructure, etc

What is the main challenge of urban finance?

The main problem for cities is the need to cope with the exponential requirements of infrastructure, services, and facilities with limited resources from poorly diversified sources, mainly financed by transfers from central governments. Therefore, to meet these challenges, they must work to expand their collection capacity and diversify their sources of financing.

Over the last month we have published several articles, which are part of a blog series on subnational financing, where we have explained different forms of urban financing that have proven to be successful, both in the region and in countries around the world. This is the case of municipal funds, sub-sovereign debt, instruments based on the recovery of capital gains, and public-private partnerships.

Mayors Forum 2023: financing sustainable development in Latin American and Caribbean cities

The IDB Mayors’ Forum 2023: Financing the Sustainable Development of Latin American and Caribbean Cities took place in Denver, Colorado, United States, on April 26, 2023, in the framework of the first Cities Summit of the Americas. The IDB Cities Network celebrated this networking opportunity for mayors of the region to explore various financing avenues, share knowledge and tools, and seek mutual inspiration to strengthen the public finances of our cities in a sustainable manner.

The IDB 2023 Mayors’ Meeting will take place within the framework of the first Cities Summit of the Americas.

In LAC, our cities are the engine of the economy and home to 80% of the population. They are also the place where ideas, creativity and innovation are generated, where different cultures converge and the future of the region is built. This meeting is a space to explore new avenues of financing, share knowledge and tools, and inspire each other to strengthen the public finances of our cities in a sustainable manner.

With the participation of nearly 40 mayors of cities in the region, as well as local and international experts, we delved into topics such as vision, planning and strategic financing, strategies for accessing the credit market, infrastructure financing and fiscal sustainability, and capacity building to generate attractive project portfolios that encourage private investment.

The meeting, closed by Ilan Goldfajn, President of the IDB, consisted of four panels. These were the main objectives of the sessions: 

  • To strengthen the generation of robust visions and clear objectives that allow the development of planning, management and financing strategies that drive investments for the development of cities.  In addition, the relevance of implementing clear objectives associated with a long-term vision that will strengthen municipal fiscal and financial management with a view to sustainable development of cities will be explored. 

  • Explore the instruments available to local governments to finance infrastructure, focusing on the generation of their own revenues, such as land value mobilization and real estate taxes.

  • Address borrowing as an alternative to other sources of financing, delving into the importance of fiscal consolidation to qualify for better rates, and the need to strengthen the collection performance of the region’s cities.

  • Addressing the importance of building technical capacity in local administrations, strengthening the knowledge of technical teams, and attracting and retaining talent to generate a solid and attractive project portfolio that promotes investment.

In a couple of weeks we will share in a blog post the results of the 2023 Mayors Meeting. Don’t miss it! Until then, we recommend you subscribe here to our newsletter to stay informed of all our blogs, events, and publications.

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Filed Under: Cities Network, Urban economics Tagged With: city financing, climate change, financing, sustainable cities

Red de Ciudades

The IDB Cities Network was created in 2017 by the Housing and Urban Development Division (CSD/HUD) as a platform for Latin American and Caribbean cities to facilitate the exchange of knowledge and solutions to address common urbanization challenges. Given the multisectoral nature of urban development, the Cities Network generates opportunities for dialogue between the different IDB divisions and cities among the public, private and academic sectors in three lines of work: (1) Knowledge transfer and dissemination. (2) Live exchanges to identify common problems and their solutions for capacity building. (3) Connections with partner institutions to promote sustainable urban development.

Editor: Daniel Peciña-Lopez

Daniel Peciña-Lopez is a specialist in international affairs, external relations and communication. He has more than 10 years of professional experience in diplomatic delegations, and international organizations in cities such as Washington DC, New York, Chicago, Madrid, Mexico City and Hong Kong, among others. Daniel is Master of International Affairs from Columbia University, Master of Science from the University of Oxford Brookes and Licenciado from Universidad Complutense de Madrid. In 2010 Daniel received the First National Award for Excellence in Academic Performance, from the Ministry of Education (Government of Spain) for being the university level student with the highest average GPA score in the country.

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Este es el blog de la División de Vivienda y Desarrollo Urbano (HUD) del Banco Interamericano de Desarrollo. Súmate a la conversación sobre cómo mejorar la sostenibilidad y calidad de vida en ciudades de América Latina y el Caribe.

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