Title: Financing Private Infrastructure in Developing Countries
Abstract: The authors look at the rationale for financing infrastructure with private capital and the challenges faced. They argue that the private sector is better able to satisfy the increasing demand for integrated infrastructure activities because it is more efficient, and aided by new technologies, and regulatory and contracting schemes. Restructuring and privatization of public infrastructure services will help improve the investment climate by expediting regulatory reforms in this sector, which will attract private developers and thus reduce the need for government performance guarantees, it will help build institutional capacity for commercial players newly introduced to local debt and equity markets, it could provide resource and managerial expertise from foreign investors and a deregulated infrastructure industry. International financing should be mobilized for new private investments. Where sovereign credit ratings are weak, special cofinancing can be set up between governments and multilateral institutions to ensure that private investors have access to international capital. Also, sovereigns should be willing to offer guarantees against perceived and actual non-market risks. The authors identify the prerequisites for local capital market financing. Pension reform is needed to encourage institutional investors to develop the bond market, funneling large amounts of savings toward long-term investments in a relatively short period. Commercial banks contribute to infrastructure finance in a variety of ways ranging from project appraisal, debt packaging, and construction phase financing to longer term lending and the underwriting and trading of securities used in structured financing. The report concludes with a set of approaches and policy priorities that would underpin an efficient and expeditious transition from public to private infrastructure.
Publication Year: 1996
Publication Date: 1996-09-01
Language: en
Type: book
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