In early 2009, the subject of infrastructure financing came to the fore as many countries announced infrastructure spending as part of fiscal stimulus programs. Yet, in many respects, the focus on stimulus spending distracted attention from the fact that countries need to develop sustainable, long-term models to fund the development, expansion, replacement, or renewal of their national and regional infrastructure.
Estimates of global infrastructure need range as high as US$3 trillion per annum. Current spending on infrastructure is well below this threshold even when fiscal stimulus is considered. Unless governments radically shift their budget priorities or increase taxation a large financing gap will continue to exist. Against this backdrop the role of private financing is becoming increasingly critical to ensure that inadequate infrastructure does not become a bottleneck for economic growth and social progress.
Although private participation in the provision of infrastructure has grown in recent years, in many markets and sectors that growth has been relatively limited and could even reverse in the face of greater demand. This has occurred despite considerable attention being paid to the role of private financing in infrastructure over the last two decades. We believe this is because of another serious and persistent gap with respect to the funding of infrastructure: that of perception between the public and private sectors. A primary purpose of this report is to help close this "perception gap" by providing a common reference point as to what considerations are important to providers of private capital and how the public sector can develop its capacity to address them.
This Report aims to establish this common reference point in several ways. At its most basic, the Report proposes a common definition of infrastructure (at the beginning of Part 1) that is relevant from a private financing perspective.
The Report also lays out a framework for how policymakers can more fully maximize the value of private finance in supporting infrastructure development (Parts 1, 2 and 3). This framework is presented as a progression from "foundational requirements" for involving private finance in infrastructure to a vision of how the large amounts of private capital needed can be mobilized in the future. This framework is a key organizing principle and takeaway of the Report and
is summarized in the schematic at the end of this Executive Summary. Finally, the Report makes extensive use of case studies to illustrate and support this framework with experience from across a variety of regions and projects. These are referenced throughout the report and fully presented in Part 4 of the report. In addition, in Appendix A, the Report provides a primer on the infrastructure finance market. Key findings from the Report are summarized below.