CAF Presents in Europe Opportunities to Fund and Invest in Latin America Integration Infrastructure

Ministers of economy, finance and planning, representatives of the private sector and experts from Latin America and Spain will discuss opportunities for integration in Latin America by developing infrastructure and establishing logistics corridors, as well as the challenges and opportunities of project financing and investment programs at the upcoming CAF Conference: Infrastructure for Latin American Integration, to be held at Casa de America, Madrid, on July 16.

Luis Carranza, executive president of CAF Development Bank of Latin America and Santiago Miralles, general director of Casa de America, will host the opening lecture of the conference, which will be divided into three sessions: “Infrastructure for integration and its impact on regional productivity”; “Financing infrastructure in priority sectors”; and “Promoting investment in infrastructure and logistics”.

The following delegates will discuss financing and investment opportunities in Latin America: Mariana Prado, Bolivia’s Minister of Development Planning; Esteves Pedro Colnago, Chairman of the Board of CAF and Brazil’s Minister of Planning, Development and Management; Mauricio Cardenas, Colombia’s Minister of Finance and Public Credit; Pilar Mas, Macroeconomic Analysis and International Economy Director at the Spanish Ministry of Economy and Business; Dulcidio de la Guardia, Panama’s Minister of Economy and Finance; Lea Giménez, Paraguay’s Minister of Finance; Danilo Astori, Uruguay’s Minister of Economy and Finance; Salvador Marin, President of COFIDES; Joan Rosell, President of the Confederation of Employers and Industries of Spain (CEOE), and Juan Béjar, President of Globalvia, among others.

Guidelines for state and municipal governments in using PPPs

Annual investments in infrastructure on the order of 5% of gross domestic product (GDP) are needed to provide the networks and services required to ensure sustainable development in Latin America and the Caribbean. In recent years, public-private partnerships/associations (PPPs or PPAs) have played a major role in most countries in the region, particularly in the private sector in the area of construction, as well as operation and maintenance of both economic and social infrastructure.

Planning and defining strategic investment has become a major challenge for the public sector, due to recent societal demands (86% of people in Latin America will be living in urban areas by 2050), which may not always be covered by public spending. In some cases it is therefore necessary to call upon other means that involve collaboration with the private sector. All governments, including local administrations (city, county and state governments) have the opportunity to address some of these challenges by using PPPs to complement the management of the infrastructure and public services for which they are responsible.

CAF has published a document entitled “Public-Private Partnerships in Latin America. A Guide for Regional and Local Governments”, establishing the basic definitions of PPPs, specifying tools that may be used to assess the use of the PPP model compared to other possible formulas, and including a number of good practices and lessons learned that will help in drafting, renegotiating or organizing agreements to ensure proper governance.

Monica López, head of CAF’s Sector Analysis and Programming Directorate, and an expert in infrastructure, explained the benefits of PPPs and how local governments can leverage this tool. “These partnerships call upon the technical know-how and management experience of the private sector to provide added value and greater technical efficiency throughout all the stages of a project (design, construction, financing, maintenance and operation) and at the same time, are a source of additional funding for governments, because social infrastructure can be provided that the public sector could not otherwise provide due to budget constraints.”

Nevertheless, this model involves certain aspects that make it quite complex in its application: the involvement of a large number of stakeholders, structuring in the medium and long term, and difficulty in defining and managing contracts. This means that several frameworks (institutional, legal, technical and financial) need to be brought together. The public sector must therefore have the administrative capability to manage these projects.

These and other opportunities for financing and investing in Latin America will be discussed at Casa de America on July 16, from 8:30 a.m. to 2:15 p.m. The full program for the event as well as registration can be accessed on the event microsite.