Which of the following is not a source of funding for partnerships

4.1. Sources of project finance

Sources of finance. Project finance may come from a variety of sources. The main sources include equity, debt and government grants. Financing from these alternative sources have important implications on project's overall cost, cash flow, ultimate liability and claims to project incomes and assets.

Which of the following is not a source of funding for partnerships
What are equity and debt?

Equity refers to capital invested by sponsor(s) of the PPP project and others.

Debt refers to borrowed capital from banks and other financial institutions. It has fixed maturity and a fixed rate of interest is paid on the principal.


Equity is provided by project sponsors, government, third party private investors, and internally generated cash. Equity providers require a rate of return target, which is higher than the interest rate of debt financing. This is to compensate the higher risks taken by equity investors as they have junior claim to income and assets of the project.

Lenders of debt capital have senior claim on income and assets of the project. Generally, debt finance makes up the major share of investment needs (usually about 70 to 90 per cent) in PPP projects. The common forms of debt are:

  • Commercial loan
  • Bridge finance
  • Bonds and other debt instruments (for borrowing from the capital market)
  • Subordinate loans

Commercial loans are funds lent by commercial banks and other financial institutions and are usually the main source of debt financing. Bridge financing is a short-term financing arrangement (e.g., for the construction period or for an initial period) which is generally used until a long-term financing arrangement can be implemented. Bonds are long-term interest bearing debt instruments purchased either through the capital markets or through private placement (which means direct sale to the purchaser, generally an institutional investor - see below). Subordinate loans are similar to commercial loans but they are secondary or subordinate to commercial loans in their claim on income and assets of the project.

The other sources of project finance include grants from various sources, supplier's credit, etc. Government grants can be made available to make PPP projects commercially viable, to reduce the financial risks of private investors, and to achieve socially desirable objectives such as to induce economic growth in lagging or disadvantaged areas. Many governments have established formal mechanisms for the award of grants to PPP projects. Where grants are available, depending on government policy they may cover 10 to 40 per cent of the total project investment. 

Which of the following is not a source of funding for partnerships
Example: Viability gap funding in India

The viability gap funding scheme of the Government of India is an example of an institutional mechanism for providing financial support to public-private partnerships in infrastructure. A grant, one-time or deferred, is provided under this scheme with the objective of making projects commercially viable.

The viability gap funding can take various forms including capital grants, subordinated loans, operation and maintenance support grants, and interest subsidies. A mix of capital and revenue support may also be considered.

A special cell within the Ministry of Finance manages the special fund, which receives annual budget allocations from the Government. Implementing agencies can request funding support from the fund according to some established criteria. In case of projects being implemented at the state level, matching grants are expected from the state government


Copyright © 2008 by Transport Policy and Development Section, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).

Which of the following is not a source of funding for partnerships

Note: The amounts represent the revenue received by WHO for the period stated and they might differ from the figures in the WHO Budget Portal, as they represent funds available net of programme support costs.

Thematic and strategic engagement funds

Thematic and strategic engagement funds (partially flexible) aim to meet contributors’ requirements for reporting and accountability while providing a certain degree of flexibility in their allocation. These funds provide more effective and efficient earmarked funding by helping to promote WHO’s stronger focus on results, while delivering on our contributors’ priorities. These represent 7.9% of all voluntary contributions in 2020-2021.

The list of thematic funders keeps growing. Thanks to our pioneers key “thematic funders” Germany, the European Commission and Japan, and others who have joined them since. WHO received US$ 550 million in thematic funds in 2020-2021, up 48% from the previous biennium. These funds give a degree of flexibility that allows WHO to be more effective and efficient in allocating funds, to focus on results for our joint priorities.

Thematic Funding, The WHO Portal Budget

Specified voluntary contributions 

Specified voluntary contributions represent 88% of all voluntary contributions. They are tightly earmarked to specific programmatic areas and/or geographical locations and must be spent within a specified timeframe.

The importance of flexible funding

WHO is extremely grateful to all donors, particularly those who provide flexible funding and thematic and strategic engagement funds as it allows WHO to be agile and strategic in efforts to achieve the Triple Billion targets. Therefore, WHO is calling for an increase in flexible funding arrangements.

WHO’s Member States are currently engaging in an active discussion to find ways to improve WHO’s funding and ensure it is flexible, predictable and sustainable.

Read more about the WHO’s working group on sustainable financing.

WHO Foundation

The WHO Foundation is an independent grant-making foundation focused on addressing the most pressing global health challenges of today and tomorrow.

Headquartered in Geneva and legally independent from WHO, the Foundation works with individual donors, the general public and corporate partners to support global public health needs, ranging from prevention, mental health and noncommunicable diseases to emergency preparedness, outbreak response and health system strengthening.

Which of the following is not a source of funding for partnerships

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