Three keys for infrastructure to lead Latin America's recovery

Infrastructure plays a fundamental role in the economic and social recovery of Latin America after the crisis generated by the COVID-19 pandemic. Its contribution to the generation of employment and boosting other sectors makes it a priority for governments and companies, however, priority and well-structured projects are required; that is why CAF, Development Bank of Latin America, has supported the pre-investment of eight regional integration projects in seven countries in which more than 3 billion dollars will be invested in the coming years, said Ángel Cárdenas, CAF's Director of Projects for the Southern Region.

In his opening remarks at the III Latin American Infrastructure Forum 20-21 - 'Infrastructure Investment: Institutionality and Resource Mobilisation', Cardenas stressed that there are three keys for infrastructure to leverage recovery in Latin America: the first consists of simple public interventions to generate employment and income; the second is to generate a planned portfolio of priority projects with adequate pre-investment and attractive to private investors; and the third is to carry out reforms for an adequate business environment such as fiscal rules to support public investment or the introduction of institutional arrangements to guarantee the quality of planning and implementation of a long-term infrastructure strategy.

Mobilising private resources for infrastructure investment is essential to complement countries' efforts. Macroeconomic and political stability; the capacity of the public sector to plan and implement initiatives; clear regulatory frameworks and contracts with clear distribution of risks and responsibilities; adequate financing mechanisms: banks and capital markets; and adequate risk mitigation will be some of the measures to be implemented to attract such investment in the short term.

Finally, Ángel Cárdenas reiterated CAF's commitment and experience to continue supporting the region: "In the last 24 years, we have supported the execution of 86 infrastructure projects for integration, which total an investment of US$32.116 billion, including US$12.461 billion (38.9%) with direct financing from CAF. In the road sector (70%), energy (17%), railways (7%), logistics (3%), telecommunications (2%), and waterways (0.4%),' he said.