Transcript idb infrastructure fund idb infrastructure fund idb infrastructure fund

INTER-AMERICAN DEVELOPMENT BANK
IDB INFRASTRUCTURE FUND
Office of the Private Sector Coordinator
IDB Infrastructure Fund
Content
 Challenges in the Region
 IDB Financing in Infrastructure
 Refocusing our Actions
 The IDB Infrastructure Fund
 Conclusion
OFFICE OF THE PRIVATE SECTOR COORDINATOR
IDB Infrastructure Fund
Challenges in the Region
 Access, quality, and price of infrastructure are critical
for competitiveness
 Infrastructure in LAC expanded over the last decade
(particularly in telecoms) but lags behind other regions
 Private investment did not offset public sector decline
 Private participation (especially in water) is unpopular
 Countries need to improve cost recovery and spend
more efficiently
 Governments remain at the heart of the infrastructure
challenge
OFFICE OF THE PRIVATE SECTOR COORDINATOR
IDB Infrastructure Fund
Challenges in the Region (cont.)
 LAC requires significant investments to upgrade and
maintain infrastructure
 WB surveys: 55% of businesses in LAC cited
infrastructure as a serious problem vs. 18% in East Asia
 Current infrastructure investment is around 2% of GDP,
which is barely enough to maintain existing base
 Exceptions: Chile 6%, Colombia 4%
 An additional 2-4% of GDP per year in investment is the
minimum needed to meet new demand, improve
competitiveness and boost growth
 China invested 9% of GDP in infrastructure in 2005
OFFICE OF THE PRIVATE SECTOR COORDINATOR
IDB Infrastructure Fund
IDB Financing in Infrastructure
2,000
1,800
1,600
US$ MM
1,400
1,200
1,000
800
600
400
200
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
IDB Public
IDB Private
Note: Figures for 2006 are for the 3 quarters ending in September.
OFFICE OF THE PRIVATE SECTOR COORDINATOR
IDB Infrastructure Fund
Refocusing our Actions
 There are ample opportunities for the IDB
 National budgets give emphasis to infrastructure
 Potential demand at the sub-national level
 Regional initiatives
 Public-private partnerships
 New instruments
 Actions taken in last 12 months:
 Mandate expanded to include PPPs, SOEs, sub-national projects
w/out sovereign guarantee
 Financing limits raised from $75 MM to $200 MM ($400 MM) for
projects w/out sovereign guarantee
 New products: refinancing, local currency guarantees/loans
 Target: US$12 billion of financing in the next five years
OFFICE OF THE PRIVATE SECTOR COORDINATOR
IDB Infrastructure Fund
Refocusing our Actions (cont.)
Needs
Preparation
Structuring
Financing
 Project Preparation is one of the major obstacles to
infrastructure investment
 Low institutional capacity
 Difficult political and economic conditions
 Scarcity of financial resources
 Project preparation not given adequate importance
OFFICE OF THE PRIVATE SECTOR COORDINATOR
IDB Infrastructure Fund
Fund Objectives
 Targeted to address infrastructure needs in LAC
 Finances preparation of bankable and sustainable
infrastructure projects by public, private and mixed-capital
entities
 Seeks to generate a “knowledge marketplace” in
infrastructure financing
 Aims to mobilize additional resources for project preparation
 IDB commitment: US$20 million
 Open to funding from other donors: Governments, multilaterals,
and private sector
OFFICE OF THE PRIVATE SECTOR COORDINATOR
IDB Infrastructure Fund
Eligible Activities
 Project identification and development
 Pre-feasibility and feasibility studies
 Project design, stakeholder consultation
 Viability studies (technical, economic, financial,
environmental, social, institutional, legal)
 Document preparation for bidding processes
 Enabling activities for infrastructure investment
 Targeted business climate enhancement measures
 Legal, regulatory and policy issues
 Public sector capacity-building
OFFICE OF THE PRIVATE SECTOR COORDINATOR
IDB Infrastructure Fund
Priority Targets/Sectors
 Projects with a high probability of reaching financial closing
 Projects that mobilize private financing for sustainable
infrastructure
 Development and structuring of sustainable public-private
partnerships
 Transport, water and sanitation, and clean energy projects
 Projects at the sub-national and local levels
 Projects in countries that encompass higher risks or more
difficult preparation
 Projects in smaller economies, where transaction costs are high
OFFICE OF THE PRIVATE SECTOR COORDINATOR
IDB Infrastructure Fund
Financing Modalities
 Non-reimbursable
 Preparation of specific projects to be financed by the IDB
 Preparatory activities for promoting investment in
infrastructure (not specifically related to a project)
 Contingent recovery
 Preparation of specific projects that do not envision IDB
financing
 Financial structuring and rating of project proposals
 Funds will be recovered if and when the project formalizes its
financing
OFFICE OF THE PRIVATE SECTOR COORDINATOR
IDB Infrastructure Fund
Key Requirements
 Eligible Beneficiaries: private, public and mixed-capital entities
from all 26 borrowing member countries
 Beneficiary projects can be regional, national, sub-national/local
 Beneficiary entities must demonstrate ability to carry out the
works
 Non-objection from national government is required
 Maximum amount per project: US$1,500,000
 Expedited approval mechanism for projects < US$500,000
 Counterpart funds: Beneficiary entities must share financial
costs of each operation
 Amount to be decided on a case-by-case basis
 Not lower than 20% of the total cost (a portion may be “in kind”)
 Funds from other sources not suitable/available
OFFICE OF THE PRIVATE SECTOR COORDINATOR
IDB Infrastructure Fund
Conclusion
 Region’s infrastructure needs are very significant
 Funding for well-structured projects is available
 Investing in project preparation is key to transforming
“needs” into projects that can be financed
 The IDB is well positioned to be an important player in this
process, both at the preparation and financing stages
 Infrastructure Fund and other grant resources
 Interface between public and private sectors
 Close dialogue with countries key to business climate improvement
 High environmental and social standards of IDB add value to complex
projects
OFFICE OF THE PRIVATE SECTOR COORDINATOR