Consists of government-led funding designed to reduce inequalities between different states or sub-regions within a country or a single market region (e.g., the European Union) by investing or catalysing private sector investment in infrastructure and initiatives that enable sustainable, low-carbon and resilient development.

Instrument category

National, regional and municipal funds

Implementation status

Moderate - tried and tested

Enabling conditions and success factors
  • There needs to be an existing framework for the disbursement of funding from national or regional governments to city or sub-national governments.
Instrument benefits
  • Provides access to additional budget support.
  • Can, in turn, create additional incentives to leverage private sector investments.
Challenges and risks to implementation
  • There can be high competition between cities and regions for funding.
  • There are fewer options for cities and regions in low and middle-income countries, particularly to access limited national budgets.

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