North Korea Times Friday 10th October, 2014
• Global Infrastructure Facility (GIF), would involve institutional investors such as pension funds, donor nations, multilateral development banks
• The move paves way for institutional investors to help fill infrastructure gaps of $1 trillion a year in extra investment needed through 2020
• Work has already started on a pipeline selection process and the GIF is talking to partners and beneficiary countries about several projects with potential
WASHINGTON - World Bank is launching a new initiative to meet the estimated $1 trillion a year infrastructure deficit developing countries face by tapping into billions of dollars locked up by institutional investors.
World Bank President Jim Yong Kim stated Thursday that his initiative - the Global Infrastructure Facility (GIF), would involve institutional investors such as pension funds, donor nations, multilateral development banks and the World Bank.
"We have several trillions of dollars in assets represented today looking for long-term, sustainable and stable investments. In leveraging those resources, our partnership offers great promise for tackling the massive infrastructure deficit in developing economies and emerging markets, which is one of the fundamental bottlenecks to reducing poverty and boosting shared prosperity," said Kim.
"Money is available to build the roads, bridges, schools these countries need but the real challenge is to find projects that are commercially sustainable," the South Korean bank president said as the annual meetings of the bank and its sister institution, the International Monetary Fund, began.
The heads of some of the world's largest asset management and private equity firms, pension and insurance funds, and commercial banks are Thursday joining multilateral development institutions and donor nations to work as partners in GIF.
Kim said the move paves way for institutional investors to help fill infrastructure gaps of $1 trillion a year in extra investment needed through 2020.
The presence of a broad range of institutional investors at the signing to launch the GIF sent a powerful message, with the most recent data showing that private infrastructure investment in emerging markets and developing economies had dropped from $186 billion in 2012 to $150 billion last year.
"We have several trillions of dollars in assets represented today looking for long-term, sustainable and stable investments," said Kim. "In leveraging those resources, our partnership offers great promise for tackling the massive infrastructure deficit in developing economies and emerging markets, which is one of the fundamental bottlenecks to reducing poverty and boosting shared prosperity."
Work has already started on a pipeline selection process and the GIF is talking to partners and beneficiary countries about several projects with the potential to transform developing economies, boost job creation, and improve the lives of poor people.
Developing countries now spend about US$1 trillion a year on infrastructure, but maintaining current growth rates and meeting future demands would require investment of at least an estimated additional $1 trillion a year through to 2020.
Kim said the GIF was being designed to tap into expertise from within and outside of the Bank Group to deliver complex public-private infrastructure projects that no single institution could address on its own.
"The GIF is also being created to complement existing project preparation facilities in partner institutions across the globe. The multilateral development banks here represent that commitment to work together on behalf of our shared client countries, to bring together our resources, experience and our financing instruments," Kim said.
Australian Treasurer and Chair of the G20 Finance Track Joe Hockey welcomed the launch of the GIF saying it complemented the work the G20 is doing to boost infrastructure investment.
"We all recognise that investment in emerging markets and developing economies will expand access to basic services and raise living standards. It also helps to underpin economic growth. The G20 looks forward to working closely with the World Bank Group and other multilateral development banks on such vital initiatives," Hockey said.
The President of the European Investment Bank, Werner Hoyer welcomed the proposed collaboration of the multilateral development banks and the private sector and capital market institutions on GIF as it will increase the resources available to prepare major infrastructure projects. It will also strengthen market investment in key infrastructure sectors and countries where such resources are lacking.
"We know that simply increasing the amount invested in infrastructure may not deliver on the potential to foster strong, sustainable and balanced growth. A focus on the quality of infrastructure is vital," said World Bank Group Managing Director and CFO, Bertrand Badre.
He said the GIF would begin operations later this year in a pilot phase to "road test" new models to deliver complex public-private infrastructure in low and middle income countries.
The key focus would be on climate friendly investments as well as ventures to bolster trade.
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