Vanderbilt Journal of Transnational Law


Lester Nurick

First Page



The theme of my address will be (a) the principal means by which the international public lending institutions (principally the International Bank for Reconstruction and Development--the World Bank), the International Development Association (IDA), the International Finance Corporation (IFC), and the Inter-American Development Bank (IADB)) join with others in the channeling of funds from private, governmental and other international sources for development projects, and (b) some of the main legal problems which arise.

An operation of this kind is usually called a joint financing operation. However, it should be noted that in a sense every loan by an international organization for a project involves joint financing, since the organization finances only a portion of the cost of the project and the balance will come from the borrower's own resources or elsewhere. I will deal primarily with cases where the balance for financing the project is obtained through foreign borrowing or the provision of equity from foreign sources.

I should also point out that I shall not discuss the raising of capital by the sale of debt obligations of the international organization itself. I thus omit a very important aspect of the capital formation process. The World Bank alone has sold some $7.5 billion of its debt obligations and the IADB has sold about $500 million, but that is a subject for another address. There are several basic reasons why the international organizations take an active role in trying to help raise other funds for channeling into projects which they finance, as follows:

(a) Under their charters they are not permitted, in effect, to finance a project for which other funds, particularly from private sources, are available on reasonable terms. One way to comply with this injunction is to see to it that they join with funds of others in a particular financing. (b) Many projects involving substantial sums of money could not, as a practical matter, be financed unless other sources (in addition to those of the sponsor) were tapped. (c) Where a project is privately owned, the owners may themselves want the participation of an international organization because of their feeling that this will give them some protection against arbitrary or unreasonable interference by the host government. And, conversely, the host government may welcome, and indeed actively seek, the participation of the international organization of which it is a member, because the international organization will often be able to give it technical assistance in the working out of arrangements for the project and help investigate whether the arrangements are fair to the government.

There are so many different kinds of joint financing arrangements that it would be impossible for me now to describe them all, even in general terms. However, I have tried to break down the bulk of them into a number of broad categories, drawing particularly on the experience of the World Bank which has been most active in this field.