October 20, 2021
Introduction
The International Project Finance (IPF) is the key mechanism to channel funds through investment in infrastructure and other key sectors relevant for sustainable development. This session was conducted in partnership with the G20 Global Infrastructure Hub and Project Finance International. The session focused on increasing relevance of international project finance due to injection of COVID-19 relief packages throughout the world. It discusses the trend and trajectory of international project finance. Furthermore, the session examined the measures to increase developing countries’ access to the international project finance for sustainable growth.
Session Highlights
The investment in infrastructure in the year 2021 has already exceeded the total investment in the year 2019. The investment in the renewables sector is growing significantly over the last year. The Panellists discussed how the COVID-19 pandemic has raised the demand for sustainable infrastructure. Furthermore, the screening for ESG risks by the investors for long term infrastructure development projects have been strengthened post the onset of COVID-19.
The discussion examined measures to increase the access to IPF by the developing countries. The Panellists mentioned that one of the key factors in selecting the countries for development financing is crystal clear decision making from the head of the government or country. Hence, there’s a need to showcase strong commitment towards sustainability by the country. Other factors that will help the country’s to tap into IPF are well regulated macro policies, structured plans, ease of doing business, level of corruption, and other socio-economic aspects. Additionally, bankable projects which can be replicated and scaled up are required.
The Panellists mentioned that one of the key risks in IPF is the currency risks. There remain a large number of projects which were tanked due to the devaluation of currency or other currency issues. The Panellist recommended that with the help of partner country’s central banks, there are options with the development agencies to mobilise the long term local currency by issuance of bonds. This would in turn ensure local currency financing and mitigate the currency risks.
On ESG standards, the Panellists resonated that ESG will be one of the key parameters in screening of investment in the near future. Various developmental agencies are already choosing new infrastructure projects with good ESG standards. This will further strengthen the oncoming focus on ESG standards.
Opening
- Mr. Richard Bolwijn, Director, Investment Research Branch at UNCTAD
On the panel were:
- Mr. David Craig, Co-Chair, Taskforce for Nature related Financial Disclosures Senior Advisor of LSEG
- Ms. Marie Lam-Frendo, CEO, G20 Global Infrastructure Hub
- Mr. Paddy Padmanathan, CEO, ACWA Power
- Mr. Graham Vinter, Senior Of Counsel, Covington & Burling LLP
- Ms. Nandita Parshad, Managing Director, Sustainable Infrastructure Group EBRD
- Mr. Jorge Arbache, VP, Private Sector, Development Bank of Latin America, CAF
- Mr. Rod Morrison, Editor, Project Finance International.
Moderator