The Strategic Infrastructure Initiative; Addressing Latin

America’s Infrastructure Gap

CG/LA Infrastructure LLC & The Latin American Leadership Forum

The Infrastructure Gap

o “The 1980s and 1990s saw a widening of the infrastructure gap between Latin America and other successful developing economies like those in East Asia. The World Bank

o “…the private sources that were supposed to meet the investment needs, have lost their appetite for infra-structure at a time the public sector is investing less rather than more - less than 1 percent of GDP in most LAC countries compared to the 3 percent needed.The World Bank

Definite Actions 3+1

Create a Professional & Aggressive Feasibility Assessment Fund

Generate ‘Performance Confidence’ of Infrastructure Projects to Mobilize Pension Fund Monies

Organize a $10 Billion Bond Fund to Catalyze Project Finance

Ensure that Each Project Maximizes Equity Opportunities for Poor People and Mid-sized Business

Aim is to Take Existing Pieces and Support New InitiativesAim is to Take Existing Pieces and Support New Initiatives

High Quality Infrastructure Projects Must Be Developed & Brought To Market At A Rapid Pace

Re-deploy $20-30 million/ 75 feasibility studies Create small, disciplined, staff Select a leader who is disciplined and action-oriented Set and achieve performance goals

Action #1 - Deploy a Feasibility Fund

Quality and Velocity of Projects is KeyQuality and Velocity of Projects is Key

Action #2 - Mobilize Pension Funds Pension Fund Monies Must Be Made Available On A

Systematic Basis For The Highest Quality Infrastructure Projects

There is over $200 billion potentially available Local ‘savings’ is critical to re-engage international equity Market performance must be the driver, not guarantees The potential for moral hazard is extreme

Create a Strong Ratings (S&P) Function, Using IIF as ModelCreate a Strong Ratings (S&P) Function, Using IIF as Model

Action #3 - Create a Bond Fund

Debt Of The Appropriate Term And Pricing Must Be Made Available, Through IFI Or Treasury Support

The Creation of a $10 billion fund should be the target priority

The fund could be backed by Treasury or by one or more of the IFI’s, and would be tax exempt

These would be ‘Latin American Infrastructure Bonds’ Once again, performance would be key

Lack of Long-term Debt Financing in Latin AmericaLack of Long-term Debt Financing in Latin America

Action #4 - Focus on Equity

Infrastructure Projects Have A Pent-up Capacity for Generating Opportunities for Small and Medium-Sized Business, As Well As The Poor

Projects should require an Equity Impact Assessment Go beyond the $1 billion in investment equals 15,000

new jobs equation to stress good jobs, new opportunities, new investments

Example: Port of Suape - 70 new companies, $1.7 billion in investment, 5,570 direct jobs, 21,830 indirect jobs benefiting 45,674 families

Objectives

CatalyzeMonitorDecide

CatalyzeMonitorDecide

BondFund

Pension/Equity

Feasi-bilityFund

Sustained Equity/ Opportunity Creation

CurrentEfforts = 50%

CurrentEfforts = 50%

AdditionalEfforts = 50%

AdditionalEfforts = 50%

GoodProjects

StrategicCapacity

Good JobCreation

1% GDPGrowth

ImproveEquityPerformance RatingPerformance Rating

Physical

Financial

Results