Financing Growth & Infrastructure

Estimates indicate that global infrastructure needs will reach almost USD 70 trillion by 2035, and the world could face a USD 5.5 trillion gap, compromising economic growth and population’s wellbeing. Also, the lack of access to affordable housing will affect more than 1.6 billion people by 2025, mostly in major cities. This gap in infrastructure investment is uneven around the world, especially when considering the urgent needs that underserved regions face in terms of basic economic and social infrastructure. Moreover, financial markets are in constant evolution and require regulations to provide a stable environment for incentivizing growth and investment.

To close this investment gap, world leaders need to increase their efforts towards sustainable and resilient infrastructure investment, helping to also meet the Sustainable Development Goals (SDGs) while considering climate change adaptation and mitigation.

Closing the infrastructure gap will entail facilitating public and private investment in infrastructure through new and improved investment vehicles as well as strengthening the global financial sector. To this effect, the B20 encourages G20 leaders to pursue the following four actionable pillars:

1: Advancing the implementation of infrastructure as an asset class by improving project bankability, supporting the creation of financial vehicles for infrastructure, and enhancing the role of Multilateral Development Banks

We advise G20 leaders to adopt market-oriented pipelines in order to create bankable and investable infrastructure assets; and to keep improving the project pipeline to bridge the gap between national planning priorities and private investor’s needs. Also, we prompt the G20 to standardize the risk/return profiles of infrastructure investments, support the creation of marketplaces, and incentivize the creation of financial vehicles that can support the development of infrastructure as an asset class. The G20 should enhance the role of Multilateral Development Banks (MDBs) to support riskier infrastructure investments, project preparation and data transparency.

2: Increasing the impact of Public-Private Partnerships by clearly establishing their role, implementing competitive procurement mechanisms and promoting executional excellence

We encourage G20 leaders to clearly establish the role of Public-Private Partnerships (PPPs), to develop a competitive governance framework for, PPPs and to promote PPPs executional excellence. Additionally, the G20 should adopt PPP models considering financial, practical and political outcomes and increase project delivery efficiency through adoption of best practices.

3: Narrowing the affordable housing gap by setting policy targets, increasing resource efficiency and expanding financial access for developers and buyers

We recommend G20 leaders to define affordability thresholds and promote a ladder approach for housing development. Moreover, G20 leaders should expand financing to reduce costs for home buyers and developers while supporting a healthy rental market. G20 leaders should also implement financing policies that expand the housing market by providing adequate instruments for developers and home buyers.

4: Ensuring consistency in financial regulation that fosters growth, stability and investment in infrastructure

We encourage G20 leaders to enhance cross-border financial regulation consistency and to promote regulatory consistency to reduce compliance arbitrage costs by ensuring a proper dialogue with stakeholders in the implementation phase. Also, G20 leaders should encourage sustainable development financing, since the development of quality infrastructure investment financing runs parallel to the development of a suitable financial system for sustainable development.

 


 

 


CHAIR:

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Eduardo Elsztain
Grupo IRSA - Banco Hipotecario
“A very important aspect of the work of the B20 is its promotion of infrastructure as an asset class and the fostering of technical work to facilitate its development. This is increasingly important since modern growth is highly dependent on the transfer of new knowledge and technologies, which, in turn, is facilitated by more and better infrastructure. Therefore, the stable flow of finance for these activities is at the core of sustainable long term growth.”

DEPUTY-CHAIR:

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Mario Blejer
Banco Hipotecario
“A neglected aspect of infrastructure investment is its potential beneficial impact on income distribution. While conventionally measured income distribution has recently suffered clear deterioration, the distribution is more equalitarian if we look at `all encompassing´ income, that includes the inputed personal value derived from the utilization of public goods and services. This is particularly true for social infrastructure but it applies also to overall infrastructure investment given its impact on labor productivity growth and wages. Investing in infrastructure can result, therefore, in significant welfare as well as political benefits.”

 

CO-CHAIRS:

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José Manuel González Páramo
BBVA
"Regulatory cooperation between countries and coordinated actions will be paramount to seize new challenges that emerge from digital innovation. This will help also to contribute to a more sustainable and inclusive society."

 

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Fernando Lago
Cámara Argentina de la Construcción
"Technology fosters the world sustainable development. Then, it is a must to overcome regional and social inequalities and reduce poverty. Closing the increased infrastructure gap will contribute to these goals. Infrastructure will improve life quality and increase productivity. There are enough financial resources. B20 should connect needs and resources."

 

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Liang Dingbang
ICBC
“China has been deeply engaged in economic growth and infrastructure development in the past four decades. We hope to share the hard lessons learnt in this process and our hopes for the future in the work of this Task Force.”