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Chile and Colombia are best prepared for public-private partnerships in Latin America and the Caribbean

Infrascope 2017 index shows countries in the region are well-positioned for infrastructure public-private partnerships, but laws require better implementation

The environment for public-private partnerships (PPP) in Latin America’s infrastructure sector is advancing steadily as countries strive to close the investment gap for key transport, water and energy projects, according to the 2017 Infrascope, a new index and report. Even so, this new analysis shows a need for greater transparency across the PPP process, better integration of social aspects into PPPs, and expanding sources of financing for projects.

The 2017 Infrascope: Evaluating the environment for public-private partnerships in Latin America and the Caribbean, evaluates the capacity of countries to mobilize private investment in infrastructure through PPPs. Developed by The Economist Intelligence Unit and commissioned by the Multilateral Investment Fund (FOMIN) of the Inter-American Development Bank (IDB), the Infrascope uses a new framework of 23 indicators to capture the latest industry developments for infrastructure PPPs, including environmental and social sustainability, fiscal control and budgeting, transparency and accountability, and new financing instruments.

Chile and Colombia tie for the top spot in the 2017 Infrascope index rankings. These countries have more than 25 years of experience and frameworks are well developed. Several countries, including Argentina, Costa Rica and Nicaragua, have developed new legal frameworks for PPPs in the past year, but they will need time to put their new policies into practice. These countries will have to test their new frameworks by building a strong pipeline of projects and ensuring that they reach financial closure.

Several governments have also sought to improve their PPP frameworks by establishing PPP-specific units, which make the implementation process more efficient. Brazil’s new PPI Secretariat, for example, was created in May 2016 and given the remit to coordinate PPP policy and to provide technical support and oversight of PPP projects.

The study also found that, despite improved regulatory and institutional environments, transparency and accountability in the development of PPPs remains a patchwork process. Few countries fully disclose complete project information; those that do can provide lessons for participants across the different stages of PPP development and help to improve the overall efficiency of the process.

While the region’s climate for private infrastructure investment has strengthened over time, financial facilities in support of PPPs remain underdeveloped. Countries with weak capital markets that rely on international institutions for funding will need to expand alternative financing mechanisms, such as green bonds or development impact bonds, to sustain their access to capital.

About the IDB

The Inter-American Development Bank is devoted to improving lives. Established in 1959, the IDB is a leading source of long-term financing for economic, social and institutional development in Latin America and the Caribbean. The IDB also conducts cutting-edge research and provides policy advice, technical assistance and training to public and private sector clients throughout the region.

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