BM calls for more space for private sector infrastructure in Latin America

BM calls for more space for private sector infrastructure in Latin America

The World Bank (WB) today urged Latin American governments to take advantage of the “potential” of the private sector to overcome the infrastructure deficit that is dragging the region at a time when several countries are going through by hard “fiscal adjustment processes”.

There are options available to increase the participation of private capital at a time of weak economic growth for the region, said the vice president for Latin America and the Caribbean of the World Bank, Jorge Familiar, at a seminar held on Thursday in Sao Paulo.

“Now that there is talk of reviving growth, infrastructure is at the center of the discussion and in Latin America we do not have the infrastructure that we need and that we deserve,” denounced the WB high official.

Familiar recommended that, given the “complex moment” that some countries are going through with deep “fiscal adjustment processes”, it is necessary that “the potential of the private sector be fully exploited”.

For this, he opted for “a new paradigm” with respect to investments in infrastructure that privileges “efficiency and effectiveness” with greater public-private initiatives and always based on “absolute transparency”.

The World Bank considered that Latin America must increase efficiency in infrastructure spending, since it represents only 2.8% of its gross domestic product (GDP) annually, compared to 7.7% in East Asia and the Pacific or the 6.9% from the Middle East and North Africa.

“Let each peso, real or dollar be invested and used in the best possible way,” said Familiar.

According to the report “Private financing of public infrastructures through public-private partnerships in Latin America and the Caribbean,” presented Thursday in the capital of São Paulo, 17 countries already have units to develop public-private partnerships.

These alliances represent “close to 40% of the annual investment commitments” in infrastructure in Latin America and the Caribbean, the text said.

The report shows, however, that private capital represents “less than a third of the total financing” of public-private partnerships, and that about half of these alliances in Latin America received some type of government support between 2010 and 2014 .

For the World Bank, the programs of Chile and Mexico are the most successful in the region, especially in the transport sector, in line with Brazil, Colombia and Peru, which also have extensive trajectories in this type of associations.

However, “all those markets have problems to solve to create a competitive bidding environment,” the document added.

The agency highlighted that Bolivia, Ecuador, Nicaragua and Venezuela “still have not developed viable public-private initiatives”.

“We have to eliminate normative uncertainty, strengthen procurement processes because when they are inefficient or not very transparent, they generate excessive and unnecessary costs,” explained Familiar, who pointed out that “we must use public resources, which are scarce, only for investments. who need it. “

In this regard, the institution stated in the document that “most of the countries of the region still face difficulties with the adequate preparation of projects, which go to tender without an adequate basis” for their execution.

For his part, the Minister of Finance of Brazil, Henrique Meirelles, said in his speech that constant changes in the regulations of Latin American countries hit a “very negative” private investment in infrastructure in the region.

“One of the most negative things in infrastructure investment is that countries change the rules from one year to the next,” explained Meirelles.

The Brazilian Planning Minister, Dyogo Oliveira, who also participated in the event, highlighted that Brazil, in addition to the deep structural reforms it has in its agenda, is preparing new regularization frameworks for the telecommunications or mining sector in order to attract more investment. .

Oliveira stressed that he works on the “simplification of the concession process” for small projects that are carried out through public-private partnerships.

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