G20 and B20 agree on the need to finance infrastructure projects
During a panel discussion at the U.S. Chamber of Commerce in Washington, senior officials and business leaders discussed the mechanisms to drive investment throughout the world.
In a panel discussion today at the U.S. Chamber of Commerce (USCC) in Washington, senior Argentine officials, business leaders and experts discussed the relevance of infrastructure to the economy, investment mechanisms and the role of the private sector.
The event was jointly organized by the USCC, the Argentine G20 presidency and the Business 20 (B20), the engagement group that brings together the international business community. Taking part in the discussion were Pedro Villagra Delgado, Argentine G20 sherpa; Neil Herrington, USCC Vice President for the Americas; Ariel Sigal, Chief of Staff at the Argentine Ministry of the Treasury; Mario Blejer, B20 Deputy Chairman for Financing Growth & Infrastructure; and Laurence Carter, Senior Director for Infrastructure, PPPs and Guarantees of the World Bank.
Sigal, of the Treasury Ministry, explained why Argentina chose infrastructure as one of the three G20 priorities for 2018 (the others being the future of work and a sustainable food future). “We had to choose priorities relevant to the world, to the G20 economies and to Argentina, and here infrastructure came to mind immediately, because there is a huge gap in that area that is growing every year,” he said. “In Argentina, we have launched probably the most ambitious infrastructure initiative in our history, which includes one of the largest PPP programmes in the world. We want to use the G20 to advance the idea that the private sector is the way towards infrastructure development."
Carter, of the World Bank, acknowledged Argentina’s commitment to the issue. “Argentina has rejuvenated the infrastructure working group under the G20. Infrastructure hits the sweet spot for economic growth, jobs and addressing inequality,” he said.
Villagra Delgado spoke of the importance of reaching consensus to ensure the stability of the global macroeconomic system and to boost infrastructure projects. “The growing inequality gap in the world doesn't only apply to developing countries. In order for us to bridge this gap, and so that people have opportunities and can contribute to the economies of their countries and raise their standard of living, we need infrastructure. Not just ports, roads, buildings, but also in terms of digital connectivity, as well as infrastructure that will provide basic services like health and education,” he said.
“The more infrastructure investment, the better the capability of a country to compete on the world market,” said Blejer, of the B20.
According to Herrington, the panel moderator, Latin America and the Caribbean needs a level of infrastructure investment of “approximately 5% of its GDP or US$150 billion dollars per year for the next 20 to 30 years.”
An urgent need
The Argentine G20 presidency seeks to build consensus on the policy responses to advance on the agenda of infrastructure for development, one of the three priorities of the group in 2018.
At the First G20 Meeting of Finance Ministers and Central Bank Governors on 19-20 March in Buenos Aires, leaders agreed to promote the necessary conditions to help develop infrastructure as an asset class that is attractive to private investors. To achieve this objective, they developed a roadmap that commits to “improve project preparation, move towards greater standardisation of contracts and infrastructure financing instruments, address data gaps, and improve risk mitigation, taking into account country-specific conditions,” according to the meeting’s official communiqué.
About the G20
The G20 started out in 1999 as a meeting of finance ministers and central bank governors. In 2008, amidst the global financial crisis, it evolved into what it is today: a major forum for dialogue and decision-making attended by world leaders from vital economies. Together, the G20 members represent 85% of global GDP, two-thirds of the world’s population, and 75% of international trade.