New Private Infrastructure Activity in Developing Countries Recovered in the First Half of 2009 Thanks to the Electricity Sector, But the Crisis Continues to Impact Projects
New private activity in infrastructurecontinues to take place in developing countries despite thefinancial and economic crisis. New projects are beingtendered and brought to financial or contractual closure.Measured by amount of investment, the rate of projectclosure grew by 2 percent in the first half of 2009 comparedto the first half of 2008, indicating a strong recovery fromthe decline of 48 percent experienced in the second half of2008. This recovery, however, was driven by large projects.Measured by number of projects reaching closure, the rate ofproject closure continues to be slower than before thefull-scale onset of the financial crisis. The number ofprojects reaching closure in the first half of 2009 was 20percent lower than the number reported in the first half of2008. This trend suggests greater project selectivity.Indeed, those projects that are reaching closure arecharacterized by strong economic and financial fundamentals,the backing of financially solid sponsors and governments.Developing country governments' continuing commitmentto their public-private partnership (PPP) programs isconfirmed by the number of new projects tendered andawarded. However, current market conditions are forcinggovernments and investors to restructure projects to improvefinancial viability. Local public banks as well as bilateraland multilateral agencies continue to be active in projectfinance, providing a critical amount of funding. It is tooearly to assess the full impact of the crisis on newinfrastructure projects with private participation (PPI).The crisis continues to make financing (both debt andequity) more difficult to secure, and hamper the ability ofgovernments to maintain financial commitments topublic-private infrastructure projects.
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