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Banking

Project finance: Private sector crucial to infrastructure needs

World Bank report calls for public-private partnerships to help the region match the pace of Asia's development.

Latin American governments must encourage public-private partnerships (PPP) if the region's chronic infrastructure shortfalls are to be met, the World Bank argues.

A report from the Bank says that a huge increase in investment from the public and private sectors is essential in a region where 58 million people lack access to clean water and 137 million people lack access to adequate sanitation, and the best way of improving these figures is through governments and the private sector sharing the burden.

Expenditure on infrastructure in the region has halved since the 1980s because of a series of economic crises that have undermined the confidence of potential private sector investors. Today, combined public and private sector investment in Latin American infrastructure stands at $30 billion to $40 billion a year.

That figure needs to be tripled if the region is to catch up with east Asia's economies, says Marianne Fay, author of the report. In fact, spending needs to increase by about $10 billion a year just to ensure "business as usual", she adds. Private sector investment, in particular, has dropped off dramatically in recent years. "In the past there would be 10 parties interested in a transaction, now it's typically just two," says the economist.

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