U.S. Agency for International Development - Development Credit Authority
Assessment and Project Development - Indonesia
| (March 2004) Mayflower Partners teamed with The Communities Group International of Washington, DC on a two-week
mission for the U.S. Agency for International Development. We performed a financial assessment of the potential use of the Development
Credit Authority (DCA) loan guarantee program in the water sector in Indonesia. |
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As part of our due diligence, we reviewed four potential
projects that could benefit from a DCA loan guarantee, which unconditionally guarantees up to 50% of the amount of a local currency
loan in case of default. Since water utilities collect their revenues in local currency (Indonesia rupiah), it is preferable to
match-fund their debt obligations (i.e., arrange for both revenue and debt to be denominated in local currency to avoid future
foreign exchange risk).
In the course of the mission, we met with five Indonesian commercial banks (Bank Mandiri, Bank Negara Indonesia, Bank NISP, PT Bank Danamon,
PT Panin Bank), three private sector companies active in the water sector, municipal and provincial government and water utility officials
in the province of North Sumatra, as well as several donor organizations - World Bank, FMO (the Dutch development agency), JBIC
(the Japanese development agency), the Royal Netherlands Embassy, and USAID/Indonesia.
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