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  1. #1
    Mehrgan's Avatar
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    "To fund" or "to underwrite"?

    Hi,

    "The government have to underwrite/fund infrastructure and social welfare projects."

    Can the verbs be equally used in such cases?

    Thanks.

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    teechar's Avatar
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    Re: "To fund" or "to underwrite"?

    They don't mean the same thing.

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    Mehrgan's Avatar
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    Re: "To fund" or "to underwrite"?

    Quote Originally Posted by RobertJ View Post
    To add a bit to the previous answer:

    a) The government funds the projects if it provides the money directly to the contractors or entities who do the actual work.

    b) In the case of underwriting the government works with an investment bank to issue municipal bonds to investors who then provide the necessary funds. The government guarantees repayment to the investors plus interest which the bonds carry. Payment of principal is due at bond maturity.

    Very helpful! Thanks for the detailed reply. So, it seems possible to use them both at the same time when you believe they are the actions the government can and should take.

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