Description

This is a fund set up for a specific purpose. It is resolving in the sense that it is self-replenishing, utilising interest and principal payments on old loans to issue financing for new projects.

Instrument category

National, regional and municipal funds

Implementation status

Moderate - tried and tested

Enabling conditions and success factors

• Most revolving funds require borrowers to meet some level of creditworthiness to ensure that funds are repaid and made available for the next project, which could be a problem for cities with a low rating.

Instrument benefits

• The instrument is relatively simple, and the revolving aspect makes for higher leverage.
• Major default risks fall onto the project proponent, not the lending bank and main costs are born by the lending institution.

Challenges and risks to implementation

• If not designed well and incentives are not understood fully, the fund may fail to be replenished.

References

Case studies

The Thailand Energy Efficiency Revolving Fund (TEERF)