In connection with financing banks will require that both financial and economic analyses be undertaken for projects.
Both types of analysis aim at assessing whether the proposed investment is viable.
The financial analysis of a project examines the adequacy of returns to the project-operating entity and to the project participants, whereas economic analysis measures the effect of the project on the economy, as a whole.
The financial analysis is part of the business plan, which serves as the basis for negotiations with financial institutions on project financing.
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