labels: World economy
World Bank to invest $45 billion in infrastructure projects in developing nations news
24 April 2009

Since the global financial and economic crisis is expected to severely create an impact on the infrastructure projects in developing countries, the World Bank, wiser from the failures of previous financial crisis of the 1900s, will provide $45 billion over the next three years to build infrastructure projects in poor nations.

Under the Infrastructure Recovery and Assets Platform (INFRA), the World Bank will increase the infrastructure lending from the previous three-year period, to $45 billion from the present $30 billion.

In the wake of last year's food crisis, the World Bank will also increase support to agriculture to boost productivity and production over the next two years to $12 billion, up from $4 billion in 2008.

The bank will be nearly doubling its agricultural support to Africa from $450 million to $800 million, and to Latin America from $250 million to $400 million, while supporting more than $1 billion in new projects in agriculture and rural development in South Asia.

World Bank group organisation The International Finance Corporation will focus on private sector investments and set-up an Infrastructure Crisis Facility (ICF) to bridge the gap in available financing for viable, privately-funded or public private partnership infrastructure projects in emerging markets that are facing financial distress as a result of the financial crisis.

The IFC will contribute up to $300 million in equity with other sources expected to bring in at least $2 billion more to co-finance infrastructure projects. This is likely to help mobilise additional funding worth three times that, covering around $10 billion worth of infrastructure projects.

World Bank Group president Robert Zoellick, said, ''Investments in infrastructure can provide the platform for job creation, sustainable economic growth and overcoming poverty, and help jump start a recovery from the crisis.''

''The Latin American and Asian crisis showed how countries can suffer from a decline in infrastructure, leaving a weaker foundation for long-term economic growth that hits the poorest the hardest. Infrastructure is also crucial to supporting agriculture. Without good infrastructure a lot of agricultural production can go to waste,'' he added.

The World Bank is learning from the failures of the previous financial crisis from the 1990s to 2000s, where infrastructure sector financing was hit particularly hard.

During the Latin America and Caribbean crises in the 1990s, some 50 per cent of government budget cuts were borne by cuts in public infrastructure spending while during the Asian crisis, Indonesia's total public investment in infrastructure dropped from about 7 per cent of gross domestic product (GDP) in 1995-97 to 2 per cent in 2000, and private investment from 2.5 per cent of GDP to 0.09 per cent during the same period.


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World Bank to invest $45 billion in infrastructure projects in developing nations