Development banks back G20 initiative to promote infrastructure investment

Out-Law News | 14 Nov 2014 | 10:47 am | 1 min. read

The International Monetary Fund (IMF) has joined some of the world’s major development banks (MDBs) in backing plans by the G20 group of the world’s biggest developed and emerging economies to create a ‘hub’ to promote global infrastructure investment.

The G20 approved the launch of the ‘global infrastructure initiative’ last September (4-page / 384 KB PDF). A pilot phase to “road test new models to deliver complex public-private infrastructure in low and middle income countries” is due to start by the end of the year, the G20 said.

The IMF said on 13 November that the move will be a major step forward in bridging the infrastructure funding gap in emerging and developing economies that is “broadly estimated” at more than $1 trillion annually. The IMF is also developing “a set of concrete guidelines on strengthening public investment management practices across countries at differing levels of development”.

In a joint statement the IMF, African Development Bank, the Asian Development Bank, the European Bank for Reconstruction and Development, the European Investment Bank, the Inter-American Development Bank, the Islamic Development Bank and the World Bank Group said: “At a time when the outlook for global growth is disappointing, investment in infrastructure can play an important role in boosting short-term demand, as well as bolstering longer-term supply capacity.”

The MDBs said they are “major players in infrastructure”, providing more than $130 billion of financing for infrastructure annually. They said: “We are scaling up our efforts to develop the information base necessary to attract investors, working with partners to undertake assessments of country readiness for public private partnerships and building databases of projects and information on project documentation and project performance.”

In addition, the MDBs have offered to hold a meeting specifically to discuss infrastructure issues with G20 leaders early in 2015.

In a report released last month (40-page / 1.56 MB PDF), the IMF said the current period of global “sub-par growth” was the right time to press ahead with infrastructure projects in countries with infrastructure needs.

Earlier this year, a study published by professional services firm PwC (24-page / 5.68 MB PDF) said the recovery of the global infrastructure market would grow between 6-7% annually up to 2025, but would be “geographically uneven and led overwhelmingly” by Asia.