World Bank Group launches Global Infrastructure Facility to channel funds to emerging markets

Even as India is finding it difficult to meet its ambitious target of attracting investments worth...

Washington | Published:October 10, 2014 2:01 am

Even as India is finding it difficult to meet its ambitious target of ensuring investments worth $1 trillion during the 12th Five-Year Plan (2012-17) in the infrastructure sector, the World Bank Group on Thursday launched a new Global Infrastructure Facility (GIF) to ensure that billions of dollars are channelised to develop world-class infrastructure in emerging markets like India and developing economies.

The World Bank Group said, through the GIF, it plans to work with the proposed Asian Infrastructure Investment Bank (AIIB), the New Development Bank (NDB) and Asian Development Bank (ADB) to boost investment in bankable infrastructure projects in the emerging and developing economies.

This development comes close on the heels of the International Monetary Fund Managing Director Christine Lagarde highlighting the need of the importance of greater public investment to build efficient infrastructure in all countries to inturn ensure higher growth and greater employment opportunities. She had also said that more investment in infrastructure is an obvious imperative in many countries where bottlenecks and obstacles to transportation and energy supply hamper development.

The key focus of GIF would be on climate friendly investments as well as ventures to bolster trade, the World Bank Group said, adding that work has already started on a pipeline selection process and the GIF is talking to partners and beneficiary countries about projects with the potential to transform developing economies and boost job creation.

AIIB is proposed by China with a registered capital of around $100 billion. China also is keen that India participates in AIIB’s founding. The NDB (or BRICS Development Bank being set up by BRICS countries including India) also is aimed at helping emerging and developing countries effectively finance infrastructure and sustainable development projects.

World Bank Group President Jim Yong Kim told mediapersons here that the World Bank will extend all help to AIIB, NDB and ADB including its experience in financing, supervising and implementing as well as its expertise in risk mitigation and in ensuring that there are enough environmental and social safeguards while building big infrastructure projects.

Recently, the Deepak Parekh committee had trimmed the 12th Plan Period infrastructure investment projections by around 40% from Rs 51.46 lakh crore (it earlier projected) to Rs 30.90 lakh crore following waning interest from the to invest in these projects with several problems troubling public-private partnership projects.

Kim said the some of the world’s largest asset management and private equity firms, pension and insurance funds, and commercial banks managing several trillions of dollars in assets will work as partners in the GIF to unlock billions of dollars for infrastructure in the developing world.

These include BLACKROCK Alternative Investors, Caisse de Depot et Placement du Quebec (la Caisse), Citibank, N.A., HSBC Bank Plc., Islamic Development Bank, Japan Bank for International Cooperation, Macquarie Group, Ltd and Standard Chartered Bank.

This partnership will help tackle the massive infrastructure deficit in developing economies and emerging markets, which is one of the fundamental bottlenecks to reducing poverty and boosting shared prosperity, he added.

Kim said recent data showed that private infrastructure investment in emerging markets and developing economies dropped from $186 billion in 2012 to $150 billion last year. “The real challenge is not a matter of money but a lack of bankable projects – a sufficient supply of commercially viable and sustainable infrastructure investments,” he pointed out.

Australian Treasurer and Chair of the G20 Finance Track Joe Hockey said the launch of GIF complemented the work the G20 is doing to boost infrastructure investment.

Arun S | The Financial Express

 

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