World Bank Infrastructure Response to the Crisis

Overview

Financial markets’ stabilization has partially restored pre-crisis financial conditions in developing countries

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Immediate impacts of the crisis are largely in the Past…

Financial markets’ stabilization has partially restored pre-crisis financial conditions in developing countries

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Immediate impacts of the crisis are largely in the Past…

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But developing countries continue to face the aftermath….

Overall, net private capital flows to developing countries in 2009 fell by 70% ($795 billion) from their 2007 high.

Syndicated loan deals involving developing countries fell from $236 billion in FY09 to $123 billion in 2008.

Developing countries could face a total financing gap of as much as $315 billion in 2010.

Lower-income countries are expected to get almost no capital flows and will suffer the most from this shrinkage,

Syndicated bank lending remains weak FDI has continued to decline

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The Bank designed the INFRA Platform as its infrastructure response to the crisis

INFRA Platform,

1• Supports counter-cyclical

spending on infrastructure to: • Provide the foundation for rapid recovery

and job creation; and • Develop a robust platform for economic

growth

2• Brings priority focus on

infrastructure investments and maintenance, and

3• Provides a platform for MDBs

and IFIs to work together to leverage finance

Action Points to Respond to the Crisis

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Stabilize existing infrastructure assets

• Project restructuring of existing portfolio • Support countries to manage currency, interest rate, and

commodity risk• Development Policy Operations and other lending operations

Ensure delivery of projects that remain government

priority

• Accelerating disbursements of existing projects• Additional financing (loan and guarantee) for ongoing

projects• “Green” infrastructure: advance climate change and low

carbon agenda

Support PPPs in infrastructure

• Support to public commitments to PPP projects (finance and advisory)

• Increased use of guarantees• Innovative instruments: OBA subsidies complementing user

fees

Support new infrastructure project development and

implementation

• Advice to governments that launch growth and job enhancement programs

• Support to PERs, MTEFs, increase government capacity to plan, prepare, implement, and manage infrastructure assets

• Implement Energy for the Poor Initiative

Responding to the Global Financial Crisis Scaled up Direct Finance

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FY03 FY04 FY05 FY06 FY07 FY08 FY090

5

10

15

20

25

7.18.0 9.2

11.012.8

16.7

21.6

WBG Infrastructure Financing(US$ billion)

ICT Transport Water Energy

US

$ b

illio

n

WB84.8%

IFC11.9%

MIGA0.5%

FY09 Infrastructure Financ-ing by Institution

• In FY09 the WBG provided $21.6 billion of countercyclical financing for infrastructure sectors – 30% higher than in FY08

• IBRD/IDA :$18.3 billion, above the INFRA target of $15 billion/year, and leveraged an additional $30.3 billion. • • IFC’s lending and equity commitments totaled $3.2 billion, leveraging $22.1 billion dollars from other sources.• • MIGA provided $108 million in guarantees. Infrastructure exposure remained high at 35 percent, illustrating

that investors clearly believe that the agency has a comparative advantage in supporting complex infrastructure

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Investment Lending Investment lending for infrastructure increased by 45% from FY2008 to

FY2009

Development Policy Operations Lending for DPOs with infrastructure increased by more than two-fold

from FY2008 to FY2009 while the number of DPOs increased by 23.%

Additional Finance Additional financing approvals increased by 37% from FY2008 to

FY2009

Also, IDA frontloading, use of Guarantees, and DDOs increased

Responding to the Global Financial Crisis Full Use WBG Instruments

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• Provides Platform for Development Partners to Work Together

More than 20 development partners participated in the INFRA Partners Forum in June 2009 and agreed to find ways to work together in support of critical infrastructure initiatives

• Projects of interest were discussed• Project pipelines were shared

Responding to the Global Financial Crisis Working More Closely with the Partners

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Responding to the Global Financial Crisis Working More Closely with the Partners

Co-operation with development partners is taking place at global, regional and project levels. Some key initiatives include:

Infrastructure Consortium for Africa

Arab and Islamic Funds (OPEC Fund for International Development, Islamic Development Bank, Saudi Fund)

Energy for the Poor Initiative

MENA Regional CSP Initiative

Bilateral exchanges with JICA and Korea EXIM

Constant exchange of information, including project pipelines with development partners.

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Responding to the Global Financial Crisis Diagnostics and Guidance

Diagnostics

INFRA has developed and shared infrastructure diagnostic tools with development partners.

INFRA diagnostics have been completed in 8 countries and are ongoing in another 14.

Guidance Notes

Guidance notes on topics such as “Greening”, public private partnerships, urban, and incorporating social dimensions have been developed and disseminated to facilitate effective infrastructure response to the crisis. .

INFRA Events

-“Greening” at the World Bank Annual Meetings (October 3009)

- INFRA Event on Low Carbon Investment during SDN Week

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Going ForwardKey Messages

INFRA has played an important role in global response to the crisis by:

Providing scaled up resources for infrastructure investments in client countries

Raising awareness about the importance of investing in infrastructure in a crisis environment

However risks remain:

Pipeline of invest ready infrastructure projects could decline unless upstream pre-investment activities continue to be prioritized

Revenue shortfalls of governments, decline in private capital flows and international aid could adversely impact infrastructure investments in developing countries

We need to remain proactive to ensure that developing countries continue to have adequate resources for infrastructure

Thank You!

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