We've developed a compendium that demonstrates good practice in how governments finance large infrastructure programs, especially during ‘exceptional times’ such as natural disasters, financial crises and pandemics.
During exceptional times, governments usually face two key challenges: budget fiscal constraints, and a decline in private sector ability to invest or co-invest in infrastructure. As such, governments cannot rely on conventional methods of raising finance for infrastructure investment - such as borrowing, the issuance of treasury securities, and quantitative easing. The insights in this compendium outline emerging approaches by national and sub-national governments to fund and minimise the cost of financing infrastructure, accelerate time to market, and leverage private capital in ways that are scalable and replicable.
The compendium was developed as part of the GI Hub’s First Phase Report deliverable on Infrastructure for Recovery Post COVID-19 for the G20 Infrastructure Working Group (IWG) and the Finance Ministers and Central Bank Governors (FMCBG) in 2020.
Increased focus on sustainable infrastructure investments: To build on the capital market’s interest in sustainability, significant private sector financing can be raised through standardised ‘green’ instruments.
Effective governance structures: Transparent and effective governance structures, especially those with external reviewers, have been successful in boosting private sector confidence to allocate financing to infrastructure.
New business models and partnerships: New partnership models with the private sector would be needed to support these new business models and to manage rapidly changing situations such as those that emerge between government and innovative financing mechanisms involving a diverse range of stakeholders.