New Private Infrastructure Projects in Developing Countries Continue to Take Place But Projects are Being Affected by the Financial Crisis
Throughout the financial crisis, new private activity has continued to take place in developing countries with projects being tendered and brought to financial closure. In the first months of the full-scale of the financial crisis (Aug-Nov 2008), t...
| Main Author: | |
|---|---|
| Language: | English |
| Published: |
World Bank, Washington, DC
2012
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2009/03/11419075/new-private-infrastructure-projects-developing-countries-continue-take-place-projects-being-affected-financial-crisis http://hdl.handle.net/10986/10991 |
| Summary: | Throughout the financial crisis, new
private activity has continued to take place in developing
countries with projects being tendered and brought to
financial closure. In the first months of the full-scale of
the financial crisis (Aug-Nov 2008), the rate of project
closure was 26 percent lower than in the same period in
2007. However, since then private activity recovered and the
project closure rate in Aug-Dec 2008 was just 15 percent
lower than in the same period in the previous year. The
slowdown reflects an initial impact of the financial crisis
which has made financing (both debt and equity) more onerous
and difficult to secure. Infrastructure projects are facing
higher cost of financing, and lower demand for
infrastructure services is beginning to impact some sectors.
The major impact to date is projects being delayed, and, to
a lesser extent, cancelled. Transport and energy are the
worst affected sectors so far, while Europe and Central Asia
(ECA) and upper middle income countries are the most
affected groups of countries. It is too early to assess the
full impact of the crisis on new Public Private
Infrastructure (PPI) projects. Financial markets remain
volatile while the financial crisis has now turned into a
global economic crisis. As the 'flight to quality'
sets in for banks and other financiers, the likely impact
will be more stringent financial conditions, not only via
higher cost of financing but also with lower debt/equity
ratios, reduced maturities and more conservative risk
allocation structures. |
|---|