Alternative financing for infrastructure development
The landscape for infrastructure funding and finance has been dramatically altered and could remain so for at least the near term.
Three trends are emerging:
- Governments are attempting to use increased infrastructure spending as a tactic for economic stimulus
- Tightened credit markets are posing an obstacle to raising debt finance for infrastructure delivery models – public or private – that depend on high levels of up-front capital repaid over the long term through user fees or general taxation
- Government balance sheets are constrained, making it more difficult to fund infrastructure projects.
This paper discusses these trends and the impact of each on infrastructure funding/finance, particularly with respect to the prospects for public-private partnerships (PPPs).