01388pab a2200157 454500008004000000100001600040245013200056260000900188300001500197362001200212520090600224650001201130650001901142650001801161773005101179180718b1999   xxu||||| |||| 00| 0 eng d  aSmoke, Paul  aImproving local infrastructure finance in developing countries through grant-loan linkages: ideas from Indonesia's water sector  c1999  ap.1561-585  aNov-Dec  aIn recent years, developing countries under fiscal pressure have increasing recognized significant weaknesses in their intergovernmental mechanisms for financing local infrastructure. Many countries are in the process of rationalizing poorly coordinated and subjectively allocated grant systems as well as loans. Such efforts, however, are typically undertaken independently of each other, often providing conflicting incentives for local fiscal behavior. I argue that the reform of grant and loan mechanisms should be explicitly linked to improve the overall effectiveness of the infrastructure finance system. The potential complications involved in designing grant-loan linkages, however, are considerable. I illustrate some key issues by examining the water sector in Indonesia, concluding with suggestions for how to think about creating such linkages in other sectors and countries. - Reproduced  aRevenue  aPublic finance  aLocal finance  aInternational Journal of Public Administration