Experts debated about investment opportunities in infrastructure through public-private associations

With the objective of analyzing the possibilities of public private interactions to develop infrastructure works, CAF, Development Bank of Latin America, presented in Montevideo the publication Asociaciones Público-Privadas en América Latina: Aprendiendo de la experiencia (Public-Private Association in Latin America: Learning from Experience), and its report  Infraestructura en el Desarrollo de América Latina (IDEAL) 2014 (Infrastructure in the Development of Latin America (IDEAL) 2014). The meeting, inaugurated by the Minister of Transportation and Public Works, Victor Rossi, And Gladis Genua, CAF's Director Representative in Uruguay, focused on the presentations of José Barbero and José Manuel Vassallo, advisors at the Institution, who explained the context of the documents presented. The meeting included the participation of  Gabriel Oddone, partner at CPA Ferrere and President of the Study Center at the Construction Chamber, who described the economic scenario in Uruguay, and referred to the possibilities that the Public-Private Association system (PPA) has in the country. 

Genua pointed out, "At CAF we are convinced that the leap in the development of the countries is a result of the creation of capacities. On the one hand, the development of human capacities, so it is necessary to promote education, and on the other hand, physical capacities, where infrastructure is a pillar to achieve social progress, economic growth, and sustainable development". 

On the same line, Minister Rossi referred to the need to appeal to the diverse available tools to materialize the "infrastructure shock" that the country requires. Appealing to the PPAs constitutes one of the responses that the government has to face this challenge. He stated "The growth of production and cargo transportation will multiply the needs in coming years. The country must make an effort to increase the pace of growth of infrastructure, and to rise to the occasion". 

At the same time, Barbero, in charge of presenting the IDEAL report, highlighted Latin America's "gap" with respect to other regions regarding this matter. He explained, "At the current pace, Latin America would take 20 years to achieve the quality of infrastructure of the countries of the OECD, while Asia's developing countries would take approximately 15 years".  

The main shortages are linked to urban mobility, although they are also expressed in other areas. The scenario of economic deceleration affecting the continent enhances this situation. The experted noted, "The region in dragging a backpack full of shortages in infrastructure, added to the increase in demand resulting from new needs. Although investment levels have grown slightly during 2012 and 2013, exceeding 3 percent of the Gross Domestic Product (GDP), there is a significant gap with respect to the needs, estimated at 6 percent of the annual GDP".  

Barbero indicated that to develop large infrastructure works, governments must "consider the sources of financing, have the necessary policies and institutions to develop projects, and incorporate the social and environmental factor when implementing those projects. You may have the money and the institutions, but if society is not taken into account, there are risks that obstacles may arise". 

Based on this, José Manuel Vasallo detailed the application of the PPA model as a financing mechanism, presenting five cases developed in Spain, Costa Rica, Colombia, Mexico, and Chile, in order to show the experience in the execution of investments under this financing mechanism. The document presented, of an academic-practical nature, examines the evolution of Latin America in terms of investment in infrastructure through a global vision, and describes the challenges faced by the region regarding the application of PPAs in the future. 

Vasallo explained that the system is a "tool" that governments have to promote investment in infrastructure, but it must not be considered the only available model. Among its advantages, he highlighted a greater technical efficiency and improvements in the quality of service. On the other hand, he explained that to promote a successful PPA model it is necessary to "interest investors and generate competition". 

Finally, Oddone referred to the deceleration scenario in Uruguay, leading "the country to lack the fiscal space necessary to make the infrastructure investments it needs". In addition to considering that there must be a greater fiscal correction, the economist stated that a key for success in PPA projects is based on having private and public actors see each other as partners.  

He stated, "In Uruguay there is a high level political definition that the private sector will play more like a partner than as a supplier of the public sector, but I doubt that this conviction is understood as applying to everybody in the same manner. If the sign of political will is not transmitted adequately to middle managers, it is difficult to achieve the necessary advances". Oddone pointed out that even in the case of Costa Rica, where the PPA experience registered delays and setbacks, work began in the area of public-private integration in 2000. He concluded, "They are 15 years ahead. If there is no transformation, we run the risk of advancing at an extremely slow pace".  

Genua reiterated CAF's commitment with development, and expressed her confidence that the continental experience will enable to advance in the design of public policies that are increasingly efficient and productive for all society.