Financing Objective 1

1. National governments should set specific goals and financial targets for water and sanitation.
2. Governments must define their policies' revenue and expenditure assumptions to increase access to water and sanitation, including where relevant reference to Poverty Reduction Strategy Papers.
3. Governments should accept their responsibility to help local communities gain access to needed financing.
4. National policies must recognize that water users and taxpayers will perforce generate most new funding. Inequities must be rooted out to make current user-fee systems viable and more just. Though full cost recovery may not be the policy objective, tariff policies should provide for sustainable cost recovery. Policies should be specific about expected levels of public subsidy, including cross-subsidy arrangements and subsidies targeted directly for the poorest.

Financing Objective 2

1. Bilateral donors and IFIs should allocate Official Development Assistance (ODA) to build institutions, to prepare for infrastructure projects, and to increase the capacity of developing countries' water operators to attract new financial resources and draw down on existing commitments.
2. Bilateral donors, IFIs, and technical assistance providers should give high priority to capacity improvements that will help local communities and water operators tap into capital markets, including pension funds.
3. IFIs should accept a major role in enabling water operators to make their operations more efficient, more transparent, and more financially viable through local financial markets, taxes, and contributions by users. They should provide advice to sub-sovereigns on how to access internal and external funding.
4. Bilateral donors and IFIs should review their ODA practices to assess the extent to which they accommodate:
   • Priority to funding for countries not on track for achieving the MDGs.
   • Grants for technical assistance and maintenance and services.
   • Funding designed to leverage non-ODA sources toward the water sector.

Financing Objective 3

1. Local governments should take full responsibility for boosting their own performance, and for ensuring transparency, benchmarking, and other measures to make themselves more attractive to financial sources.
2. National governments must create arrangements that allow local governments and local water operators to get easier and cheaper access to local and -where appropriate- international capital markets.
3. National governments, with the assistance of the IBRD and RDBs, should facilitate municipalities' access to borrowing, especially by:
   • developing local financial markets;
   • advising local governments about the tools and appropriate ways to get funds;
   • securing currency risks;
   • developing loans to sub-sovereigns with long-term maturities and affordable interest rates;
   • identifying or creating pooling mechanisms allowing local governments to get better credit ratings;
   • securing ability of municipalities to reimburse loans; and
   • providing transparency and good legal environment.
4. Within countries, regional and local development banks, or specialized financial institutions, should be assigned as intermediaries for channeling external and central government funds to water operators, including community and NGO groups that have improved performance.
5. Regional and Local Development Banks and specialized financial institutions should provide technical assistance to municipalities to create favorable lending environments (donor governments be asked to assist via OECD exercise).
6. UN Resident Coordinators should associate their programmes with the actions above by collecting appropriate and focused information and convening meetings;
7. National and local governments should explore innovative, job-creating approaches to sanitation to reduce costs.