Latin America urged to focus on sustainable infrastructure
Attendees listen to a panel discussion at the PPP Americas 2019 event in Punta Cana, Dominican Republic, on Thursday, May 16. EFE-EPA/Orlando Barria
IDB Invest executive Gema Sacristan poses for a photo during an interview with EFE at the PPP Americas 2019 event in Punta Cana, Dominican Republic, on Thursday, May 16. EFE-EPA/Orlando Barria
Punta Cana, Dominican Republic, May 16 (efe-epa).- Sustainable infrastructure - with an emphasis on mitigating effects of climate change - and the need to boost transparency in projects were the main themes here Thursday on the final day of the largest regional forum on public and private partnerships (PPPs).
"We not only believe that there is a general gap in infrastructure in Latin America, but that the quality is low," Gema Sacristan, director general of the investment arm of the Inter-American Development Bank (IDB), said.
"We want to make infrastructure that is more resistant to the effects of climate change," she said at the PPP Americas 2019 event in Punta Cana.
The official with IDB Invest, a co-organizer of the conference, said that by next year, the IDB Group wants 30 percent of projects to include elements of mitigating or adapting to climate change.
"Governments needs to understand that while sustainable infrastructure can cost a little more today, that pays off in the long run," Sacristan told EFE.
That is certainly the case in the Caribbean, one of the areas most vulnerable to climate change and a region that depends heavily on tourism as an economic engine.
Investors are also increasingly attentive to the importance of building things that endure.
"The private sector is changing a lot and very quickly. Over the last three years, they are embracing the great agendas of sustainable development. When previously, it was an issue for the multilateral organizations such as the IDB or the World Bank," Sacristan said.
Another vital element for the success of PPPs is transparency and the bolstering of regulatory frameworks.
Within Latin America, the Economist Intelligence Unit rates Chile, Colombia and Peru as providing the best environments for PPPs.
IDB figures indicate that the region currently invests only around 3.5 percent of gross domestic product (GDP) per year in infrastructure, well below the estimated 5-6 percent of GDP that studies show is needed to achieve an adequate level of development.
That means the shortfall in terms of needed infrastructure spending over the next two years will amount to roughly $150 billion region-wide.
Because Latin American and Caribbean countries lack the resources to close the gap, "it is necessary to resort to international investors, and PPPs are instruments that can provide profitable results for both parties," IDB Invest CEO James Scriven told EFE during the forum in Punta Cana.
PPP Americas 2019 brought together more than 500 public-sector representatives and private investors from across the region.
Since 2006, the IDB Group has approved more than $5.8 billion for the development of different projects in the region under PPP arrangements.